F.A.A.M. van Winden

Campaign Expenditures, Contributions and Direct Endorsements: The Strategic Use of Information and Money to Influence Voter Behavior

A costly signaling model is presented in which we show how campaign expenditures can buy votes. The model shows that the amount of campaign expenditures may convey the electorate information about the candidate’s intended policy. When this model is extended to allow for a contributing interest group, it appears that for campaigning to be informative it is sometimes crucial that campaign funds are supplied by informed third parties. The extension also provides an explanation why interest groups contribute to the candidate’s campaign, rather than using direct endorsements; they may need the candidate as an intermediary to filter their opposing interests.

Experimental Studies of Signaling Games.

This paper surveys experimental studies of sender-receiver games. In these games a sender, with some private information, selects a signal that is observed by a receiver. The latter then selects an action, and the payoffs to both are determined by the information, and sometimes the signal, of the sender and the action chosen by the receiver. Examples of signaling games abound in economic theory. They are used to study such diverse phenomena as the selection of employees, investment decisions, the choice of insurance contracts, advertising, entry-deterrence limit pricing, and lobbying1. Their wide application strengthens the importance to investigate the performance of signaling game models in predicting and explaining actual behavior. As we discuss in greater detail in the next section, laboratory experimentation is an attractive research method to that purpose because it offers the opportunity of control and replication. Moreover, it enables the researcher to create an environment that gives a model its “best shot”.2

Public pensions and political decision-making

SummaryA simple decision-making model regarding the financing method and benefit level of a public old age pension is developed. In line with existing literature, the decision-making process is supposed to be in the form of direct democracy, initially, In order to apply the model to a situation of a representative democracy, to wit the Netherlands, five social groups are considered which may be assumed to influence the decisions taken by the government organization. The empirical results show unanimous support for the PAYG system actually chosen at the start of the pension scheme in 1956. The results are highly suggestive, furthermore, as regards the fact that the financing method of the pension scheme has recently become a parliamentary issue. If one endorses the view that long-term considerations should be given a more preeminent place in this context, which would demand a change of the decision-making structure in favour of the young, then the political support for such a change would seem to be present at the moment.