NB: I have been forwarded a paper that applies a similar game model, perhaps more appropriately, in a situation of political lobbying. Read it here.
Okay its hard to stay away from politics despite my current GMAT preparations and other duties. One more thought: A donation isn’t a donation – it’s a purchase! Brilliant! Better: It’s an investment. (tax deductible?) Go Long Obama and short McCain.
It raised an interesting thought – donations as business transactions. Here is the logic:
Simplifying assumptions:
Two candidates, O and M. Whoever gets the most donations wins more votes and thereby the White House.
Everyone votes and pays taxes (albeit at various brackets)
O, if elected, will introduce tax credits worth $TC (source) per taxpayer. M, for the average American individual, will do no such thing (source)
M obtains donations exogenously, from “Special Interests”, to the tune of $SI (my model is SO neutral right?)
O only gets donations from people benefiting from his policies, total of $D per person. All donations are only calculated for personal gain from $TC.
To show:
D*number_of_taxpaying_americans_benefiting_from_tax_credit>SI in order for O to win.
TC must always > D
therefore (rearranging..)
TC > SI / (number_of_taxpaying_americans_benefiting_from_tax_credit)
Plug in numbers:
TC: $500 each. (source, again)
SI: $4,389,028 (source)
N = number_of_taxpaying_americans_benefiting_from_tax_credit = 150,000,000 (source, again)
Optimal TC = $0.029 or 3 cents. Compare to $500. Big enough a gap to overcome exaggerations from the Obama camp about the size of N. Assuming the basic relationships essentially reflected in my assumptions are broadly applicable, it would be the economic equivalent of not bending down to pick up the $499.97 dollar bill for one to fail to donate to the Obama campaign given this scheme.
The alternative inference from this (simplistic!) model is that the federal law limiting political campaign contributions by corporations encourages vote-buying from the people instead.
This was a late-night back of the envelope exercise, please dont be offended in any way if you are, you need to reserve offense for better things than this.
Image credit: http://my.barackobama.com/page/s/michelle
