Campaign Contributions and the Desirability of Full Disclosure Laws.

This discussion paper resulted in a publication in the 'Economics & Politics' (1999). Volume 11, issue 1, pages 83-107.

In a signaling game model of costly political campaigning in which a candidate is dependent on a donorfor campaign funds it is verified whether the electorate may benefit from campaign contributions beingdirectly observed. By purely focusing on the informational role of campaign contributions the modelseems somewhat biased against the potential benefits of direct observation. Still, the conclusion can bedrawn that directly observable contributions allow for more information being revealed in equilibrium.Using this result, from an informational perspective a case can be built for the desirability of fulldisclosure laws.