Which idea?
I doubt it, though this is an empirical question rather than a theoretical one. I took a quick look at opensecrets.org, and every single top industry was a big hedger. This is hardly a rigorous survey, but to my eye, it looks like everyone who can pay wants some shot at payback. Donations to PACs are even more evenly hedged between left-leaning and right-leaning.
By the way, when I say “public good”, this is not necessarily “public-minded.”
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I also think your speculation about what would happen in a non-bet-hedging landscape is only one of a number of possible outcomes
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Here is where the mathematics would be our friend. We could characterize the equilibrium and derive results that would eliminate speculative outcomes. I will give some serious thought to making a model of this and seeing what happens.
Though I cannot prove it unless I write some equations, I just know that this cannot be a stable result in equilibrium. Corporation A strategically chooses its contribution level based on its expected utility from contributing which takes into account the probability that his contribution will be pivotal. Suppose that we follow your logic, that every corporation’s contribution converges to 0 in a closely fought election. But as this occurs, the probability that Corporation N’s contribution is pivotal increases, thus increasing the utility he gains from contributing. If he strongly suspects that none of his competitors will contribute, he improves his utility even if he tosses in a buck to a candidate chosen at random in a closely fought election, since it is very likely that his marginal buck will be enough to swing the vote since no one else is kicking in. I am sure you see where this is going. In any stable equilibrium, there will always be nonzero contributions.
Median voter theory says they already converge, and for the most part, I believe this is true. Contract the donor base even further and the individual donors care less about policy and ideology as long as their checks are getting cut.
I don’t think this has anything to do with a prisoner’s dilemma, but I take your point when you say that it is sub-optimal. The solution to the prisoner’s dilemma involves voluntary cooperation. I do not think there are any good ways to induce this kind of cooperation in an agonistic political setting.
Anonymous donations, I believe, would yield to probabilistic policy decisions. This is not perhaps the kind of leadership that this country needs.
Please do, I am looking forward to it.
[SIZE=1]She is rather direct like that. I do, however, have the opportunity to take long weekends during the summer. I imagine I might be able to arrange a trip down your way, too.[SIZE]
But “every single top industry” != a broad swathe of the public. By and large, individuals do not bet-hedge, and the less wealthy an individual the more likely that his or her political contributions will be both minimal and directed to only one side. To the extent that donations buy access (a thoroughly unshocking observation), your average Joe and Jane Constituent are, individually, afforded a disproportionately small proportion of a candidate’s time and thoughts. And that’s an understatement. Catering to all industry is not the same thing as enacting policies in the public good.
I can buy that; let me refine my scenario. Say a bet-hedging donor gives $x to Candidate A and $y to competing Candidate B, where both amounts are the product of some presumptively rational calculus in which the donor takes into account the likelihood that each candidate will win, the amount (and proportion) given to the candidates by other donors, the ideological resonance of each candidate with the donor (on the one hand, a resonant candidate will be more likely to pursue policies favorable to the donor without a large contribution; on the other hand, giving a lot of money to a non-resonant candidate might be utterly futile), and so on. Now say bet-hedging is prohibited. The donor can a) give money to one of the two candidates; b) give money to neither of the two candidates; or c) violate the law and give money to both of the candidates. Assuming decent enforcement mechanisms, let’s discount the likelihood of c). My assertion is that even if the donor chooses a), it is extremely unlikely to continue to donate $x+$y. (Although, as you point out, the closer the election the more likely it would be that the donor would give as much in a non-bet-hedging world as it would in a bet-hedging world.) The calculus is completely different. It’s hardly even clear, to me, that the donor would necessarily give $x or $y to the candidate; the revised donation amount might be smaller than either.
All of which is to say that I believe a prohibition on bet-hedging would remove some money from the system – maybe a lot of money. Whether that’s normatively desirable, or what the unintended consequences would be, are completely different questions.
(Sorry if this is sorta muddled…I’m doing it at work, on the fly, and with one eye out for my judge.)
Could you explain this further?
I’m no longer sufficiently versed in game theory to articulate what I mean. 
If everybody gives (or solicits) because everyone else gives (or solicits), while secretly wishing they didn’t have to give (or solicit), why wouldn’t there be a way to force cooperation? Wouldn’t a blanket prohibition accomplish exactly that?
Even if true, I think it’s preferable to policy decisions prompted on behalf of the interests of the monied to the exclusion of others. But there’s some good argument fodder there.
It’s done; check your gmail.
Just a brainstorming idea I had a while back:
Suppose we could somehow come up with a way in which campagne donations could ONLY be made anonymously. (difficult premise, I admit)
You could then make revealing the fact that you made, or will make, a donation de-facto bribery. You make ASKING for a donation de-facto solicitation of a bribe. Doners can still make donations.
The point is that EVERY freaking pol and every freakin’ doner swears up and down that they are not buying influance. Which we all know is crap. If they are not buying influance then there is no reason the pols need to know where the money came from, no?
Good grief, I am getting nothing done today. I have to keep an eye out for my boss, too.
Suppose for a minute that this were true. Suppose also that you successfully prohibited bet-hedging. Suppose once again that your intuition were right, that prohibiting bet-hedging chases a lot of corporate money out of politics. Now consider Joe Blow’s strategic campaign contribution decision problem.
He knows that bet hedging is not legal. He believes that big corporations are giving less money. He reckons that in a world of less corporate money, his candidate will be a lot more thankful for his fifty bucks than she would have in the previous world of bet hedging. So in the Brave New world, he thinks that his fifty bucks has a higher probability of influencing the election outcome and securing him some ex post benefits, whereas in the previous world, fifty bucks would have been swamped by the unending tide of corporate money.
So he donates it. Every other Joe Blow facing the same decision problem donates, too.
Corporations are not stupid and can solve Joe & Co’s decision making problem. They don’t particularly want the little man having any more say than he did before, in the previous world. They want their access and subsidies. So they donate enough to secure them the kinds of ex post nuggets that they need.
Joe & Co aren’t stupid either, and they know how to solve the corporations’ decision making problems. Joe knows that no matter how much he gives, the corporations will swamp it. But he also knows that the corporations can only back one horse. So maybe, depending on how we specify the game, Joe does decide to kick in his money, because even if the corporations drown out his bet, perhaps half of them are going to back the wrong horse. And so do Joe & Co. And, of course, so do the corporations. The result is that more people engage in ex post seeking behavior and perhaps the total pool of donated money increases in equilibrium. Once again, you need the math to work out the exact numbers.
This is my response to your refined scenario.
I think these elements cannot be excluded from the discussion, as per my scenario above.
Heh, you and me both.
You mean median voter theory? This is not spectacularly informative, but it gets the job done. Result is that all ideological profiles converge upon the median voter’s, no one votes, the election is decided by a coin toss.
I do not believe it would in the real world. All this accomplishes is raising the costs for bet hedging. If the costs are higher and the participants are fewer, the rewards will also be higher, which, of course, in turn affects the corporations’ strategic contribution decisions. Regulation and prohibition rarely change the structural incentives of anything. If we know anything at all, we know that people respond to incentives.
This is actually a really good point. 
Interestingly enough, it is also something that can be modeled. One can test whether policy outcomes based on probabilistic calculations of future support from a population with private preferences are more optimal than outcomes based on a public preference profile that contains preferences associated with “monied interest.” Hmm.
This is an excellent idea. See Ian Ayres & Jeremy Bulow, The Donation Booth: Mandating Donor Anonymity to Disrupt the Market for Political Influence, 50 Stan. L. Rev. 837 (1998); Bruce Ackerman and Ian Ayres, Voting With Dollars: A New Paradigm for Campaign Finance (2002).
Maeglin, your response to follow.
Oh, and also see A Modest Proposal For Campaign Finance Reform, posted by me five years ago.
Maeglin:
Even if you’re right – that’s such a fun debate phrase, isn’t it? – even if you’re right, this is a normatively acceptable outcome for me. A ton of people and many corporations giving, say, $2 million to each campaign is better than very few people and many corporations giving a total of $1.5 million to both campaigns. Especially if it means that neither the people nor the corporations are giving to both sides simply to ensure ex post access. Public participation is public participation.
Thanks. But no, I was more confused about the second sentence:
Did you mean “candidates” when you wrote donors the second time? If not, I need some elucidation.
Is this a variation of the petitioners’ argument in McConnell, “People are always going to find a way around existing campaign finance restrictions, so why have restrictions at all?” Or are you contesting my notion that perhaps neither the donors nor the candidates particularly like the practice of bet-hedging, and only do it because everyone else does? Or are you saying that, were bet-hedging to be prohibited, donors (seeking to gain an advantage) would invariably find some way to gain access to the eventual victor, whether pre-election or post-?
Hmm indeed.
Mon Dieu, there’s that horrible word “normative” again. By what standard is this a normatively acceptable outcome? If I can demonstrate that it is not pareto optimal, would it still be normatively acceptable? An environment in which everyone has to choose ex post seeking behavior and will achieve benefits probabilistically creates a serious drag on disposable income and will increase the price of goods consumed by political campaigns. How is this an optimal policy outcome?
Ah, ok, requires a little bit of backtracking. You discussed the possibility that platforms converge. My thinking is that they already do. If you contract the number of supporters a candidate needs to have to win, you increase the number of possible policies a leader can implement that can still satisfy their private goods needs. A leader doesn’t need a balancing act as long as he can pay off his cronies. If he has to pay off a lot of cronies, the job is harder and he has less fewer policy options that satisfy all of them.
No. The fact that people are going to find a way around them does not imply that no restrictions should occur. I think Mitch McConnell is a world class dickhead, btw.
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Or are you contesting my notion that perhaps neither the donors nor the candidates particularly like the practice of bet-hedging, and only do it because everyone else does?
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No. I think that the donors probably like it quite a bit. However, if you really think about this, another game theory problem unfolds. Suppose you hedge and give money to Candidates A and B. B wins a close fought election and comes to power. He goes to www.opensecrets.org to figure out who donated to him so he can write his payback checks accordingly.
“Hmm, Gadarene gave ten bucks to me and ten bucks to my opponent. What a little shyster, he thought he could play both sides and didn’t really care who won. No pork for him! Now Maeglin, on the other hand, gave zippo to the opposition and ten bucks to me. He must have really wanted me to win. He has a high affinity for my politics, and will probably be a loyal sumbitch. I can count on his vote and support in the future. He gets a monorail in his village.”
Campaign donation then becomes a signalling game. What is the optimal donation you can make given your preferences over outcomes, your beliefs about the candidates’ probabilities of victory, and your beliefs about what the rest of the pack is donating? If you hedge too much, you signal your lack of preference over outcomes and can be safely ignored by the elected leader. He will rightly believe that since you gave equally, you are such a greedy little bum that he can count on your support no matter what he does.
The donor’s job is to signal to both politicians that you are going to be loyal. This is not an easy problem to solve.
Not saying that either.
First off, acceptable and optimal are two different things. Second, what in the real world is pareto optimal?? I do think it’s a pareto superior outcome, but I’d be happy to be shown differently. Third, normatively acceptable by my standard, although I’m admittedly not your dieu. 
And normatively acceptable for some of the reasons I’ve sketched out: increased public participation in the political process, corporate contributions having less marginal value than they otherwise would, less appearance of corruption (the prevention of which is, after all, a compelling governmental interest in its own right, causing as it does disaffection and apathy).
Bet-hedging, you mean? Why? They’re spending $x+$y for, at best, $x or $y value, and run the risk (as you note) of being tarred as insufficiently loyal by the eventual victor and not given any spoils at all.
Heh. Or the result of the information might simply be tree-shaking behavior by the candidate. Check out this testimony from a CEO, as quoted in McConnell:
You’re right, though, that sometimes bet-hedging is frowned upon. To quote from my paper: For example, the Republican National Campaign Committee instituted the “75 Percent Club” explicitly to counter bet-hedging by business; the club gives “special access to political action committees that give at least [75 percent] of their donations to GOP candidates.” Mike Allen, Democrats Gain as Business Hedges Bets; House Campaign Arm Leads GOP in Money, WASHINGTON POST, October 17, 2000, at A11.
That’s one of the more interesting aspects of this – the possibility for signaling intensity. Why don’t most bet-hedging donors just give equally to competing candidates? Some give 60-40, some give 70-30 – some even give 90-10! In part it must be that the donors are either a) counting on the candidates not to know how much their opponents have been given, but to weigh the donation instead as against contributions by other donors to that candidate, or b) to understand that, relatively speaking, the NRA (for example) giving 15% of its contributions in a given race to the Democratic candidate is a big deal, and to be accordingly obeisant.
To forestall your question about marginal value: Let’s say that no matter what, the corporate donors will contrive to give $100,000 more than the Joe Blows out there in order to maintain the weight of their contribution. Notice first that this is assuming that there’s no contribution ceiling, which is counterfactual on the federal level. If there’s a limit to the amount any one donor can give, then the problem you outline in the first place as your response to my refined scenario becomes easier to deal with. But assuming no ceiling, my argument is that a corporate donation of $100,100 in a world where Joe Blow donates $100 has greater utility to the corporation than a corporate donation of $500,000 in a world where Joe Blow donates $400,000.
I don’t think it’s likely that Joe Blow will, or can, habitually donate $400,000. But 40,000 Joe Blows could, and I don’t foresee that having the effect you describe on disposable income and the cost of goods.
Now I gotcha. But I don’t know if I agree. Doesn’t it depend on the preference intensity of the donors and the range of policies desired? If I only need one donor to win, that donor is sure as shit gonna understand the leverage they hold over my campaign, and will expand their policy demands accordingly. Contrariwise, if you’re beholden to a number of donors, but each, recognizing that they’re but a small cog in your campaign machine, would be satisfied with relatively small favors (hell, even access by itself might be enough!) in exchange for their contribution, the candidate might end up freer overall as a result.
One more thing. I don’t think your conclusions necessarily follow, above. If you’re a loyal sumbitch who the now-officeholder can count on for your vote and support in the future, you’re probably gonna continue to support him (or at least not support his opponent) even if you don’t get that monorail. Me, however, he can woo, in the hopes that next time around (assuming, as you care, that the officeholder cares about such things), I’ll see the error of my ways and support only him. Whereupon he can start taking me for granted as well.
…assuming, as you are, that the officeholder cares about such things…
What works well depends on what you’re working on I reckon. The system works well if you’re gunning for a duopoly. But it works pretty shittily if you’re an LP candidate.
Or, indeed, if you’re an LP voter.