Corruption, Competition, and Contracts: A Model of Vote Buying

IMF Working Papers, January 1, 2006

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Examines how the form of vote-buying contracts affects policy outcomes in the presence of competing interest groups.
Studies contracts contingent upon individual votes, policy outcomes, and/or vote shares.
Considers two voter preference types: voters who care about their individual votes, and voters who care about the policy outcome.
Main conceptual findings:
- Vote buying is cheaper when what can be contracted upon coincides with what voters care about.
- Vote buying becomes extremely costly, or even impossible, when there is no such coincidence.
- Vote buying is extremely cheap, or even free, when contracts can be contingent upon both individual votes and vote shares.

Contracts contingent on the same object voters care about reduce the cost of securing votes.
Mismatch between contractual contingencies and voter concerns raises the cost of vote buying and can render it infeasible.
Allowing contracts to condition on both individual votes and aggregate vote shares can dramatically lower the cost of vote buying, potentially to zero.

The enforceability and allowable scope of contracts (individual votes, policy outcomes, vote shares) critically shape the ease and cost of vote buying.
Regulatory or legal constraints that limit contract contingency to objects misaligned with voter preferences can reduce vote-buying activity by increasing costs or making it impossible.
Conversely, permitting complex contingent contracts that span individual and aggregate voting measures can facilitate inexpensive vote buying, suggesting a need for careful policy design to prevent corruption.