The Same Side of Two Coins: The Peculiar Phenomenon of Bet-Hedging in Campaign Finance


The paper addresses the propensity of large donors to give to competing candidates or competing party organizations during the same election cycle – for example, giving money to both Bush and Kerry during the 2004 presidential race – a practice here termed 'bet-hedging.' Bet-hedging is analyzed in strategic and game-theoretic terms. The paper explores the prevalence of bet-hedging, the possible motivations behind the practice, and the informational concerns surrounding it. The paper argues that bet-hedging, out of all donation practices, carries with it a uniquely strong implication of ex post favor-seeking: if a donor prefers one side over the other, by bet-hedging it is at least partially cancelling out its own contribution. If the donor has no preference, there is no rational reason to give its money to either side unless it seeks some kind of recognition, in the form of increased access or influence or in the avoidance of retaliation for not giving, by the eventual victor. The paper thus contends that bet-hedging can (constitutionally) and, though it is a tougher question, should (normatively) be regulated under the Buckley v. Valeo and McConnell v. FEC frameworks.


Business Organizations Law | Constitutional Law | Economics | Law | Law and Economics | Law and Politics | Legislation | Public Law and Legal Theory

Date of this Version

August 2005