Selling Favors in the Lab : Experiments on Campaign Finance Reform

Substantial public policy debate centers on campaign finance reform. Campaign resources can provide benefits to constituencies when used to fund the distribution of information, but voters can be harmed if candidates trade policy favors to special interests in exchange for contributions. Unfortunately, because informative field data on this topic are limited, effects of campaign finance strategies on election outcomes and economic welfare remain uninformed by empirical analyses. This paper reports data from experiments designed to shed light on the campaign finance debate. Our experiment derives from a model where power-hungry candidates trade favors for campaign contributions. We find that voters' beliefs respond to advertising in a way that is consistent with theory. In relation to privately financed electoral competitions, in publicly financed campaigns (i) high quality candidates are elected more frequently, and (ii) margins of victory are larger. We also find that caps on private fundraising can improve voter welfare