Abstract: This paper explores a model of special interest politics that allows for agreements among long-lived interest groups, political parties, and bureaucrats to be supported by informal relational contracts. Special interests and political parties may form agreements involving the exchange of campaign contributions in return for influence over agency actions, but, as agreements are non-binding, there is a temptation for the winning party to renege after each election. We characterize a relevant refinement of the efficient sequential equilibria. We find that political parties and special interests are able to form stable alliances that generate influence over agency decisions—agencies that acquiesce to the demands of political allies are rewarded in the agency funding process and shirking ones are punished. Furthermore, the political parties have incentive to form a system of advisory committees that are positioned to monitor the agencies and can be sold to the allied special interests.
Bio: Brian Roberson is an Assistant Professor of Economics in the Krannert School of Management at Purdue University. His research focuses on the strategic allocation of resources in environments in which the outcome of a given conflict is determined by the performance in multiple component conflicts and examines how—in applications from the economic, information, military, and political sciences—behavior depends on the structural linkages between the individual contests.