How Game Theory Applies to Lobbying and Why it Shows That We Need Political Change
We are approaching one week since Vermont Senator Bernie Sanders took the stage against Hillary Clinton in the first Democratic Debate for the 2016 Democratic Nomination. One of the most popular lines of his was “It is not Congress that regulates Wall St. It’s Wall St. that the regulates U.S. Congress!”. Clinton, on Wall Street, claimed that she told them not to misbehave shortly before the 2007 Collapse. So how exactly does Wall Street regulate congress as Bernie Sander’s claims? In short, through Lobbying. Lobbying is basically the act of paying senators and congressmen to consider a certain interest groups desires and hopefully get them to vote a certain way. When two interest groups vie for a bill to go two different directions, it becomes a perfect example of Game Theory — Who can win over the most senators and congressmen.
Although Lobbying seems fairly corrupt in its modern form, in theory it is actually based in helping society. Lincoln Chafee claimed that he made a vote without knowing the full gravity of the situation shortly after he entered office. Well, the purpose of Lobbying is to pay people to inform him of the issues and hopefully help him make a more educated choice on bills like The Patriot Act (the topic of which Chafee was responding to). For example, lets take the Fossil Fuel Industry (FFI) vs. Environmental Activists (EA). If everything goes as it is supposed to, both groups educate the senator about why their side should be favored in their decision. In this game, the Senator makes their own values for societal benefits of voting either way and chooses the one with more value. So not really a game as much as simply a decision. However, this perfect world assumes a couple of things; (1) Interest groups have the same resources with which to educate and (2) lawmakers consider their votes with the primarily the public good in mind. Eliminate these assumptions and Lobbying becomes a much darker game. Consider that it is likely that lawmakers like nice things like campaign contributions and quality dinners. Second consider that the Fossil Fuel Industry generates large profits while Environmental Activists are largely non-profit and rely on moral decision making and donations to operate. These two interest groups each have 2 options; Lobby their side or save the resources. In this game, If one side lobbies and the other doesn’t the lawmaker will choose the interest group that lobbies, thus it is never a dominant strategy to not lobby (even though, if neither lobbies, then it is more likely that the socially optimal choice will be made in terms of law). When both groups Lobby, it becomes a matter of the character of the lawmaker. If they are committed to honesty, both groups Lobbying will result in the same thing as neither group lobbying. But, alas, lawmakers and human and humans value money and experiences. So we can assume that if both lobby, the lawmaker will choose whichever side is likely to give them the most value. And here is where the corruption of lobbying lies. Without significant regulation, the groups with the most resources will get the most votes to their name and have laws that benefit them the most. So in our case of FFI vs. EA, FFI will likely get laws to pass to that benefit them the most. However overwhelming evidence of climate change indicates that we have to cut our fossil fuel consumption in order to preserve our planet. So even though the choice that the lawmaker would probably make without a Lobby would be better for society, we end up with laws that perpetuate our problems instead of fix them. This is not limited to energy. Banking (as mentioned), Gun Control, Insurance, Trade, Labor are all issues that have diametrically opposed interest groups that lobby in order to push their agenda, leading to societal inefficiency. It is clear we need a reform of the lobbying system to get back to the theoretical model of lobbying: lobbying to inform candidates, not to buy them. In essence, we need to fix the game in order make the game fair and allow lawmakers to effectively help society.
http://www.motherjones.com/environment/2015/07/hillary-clinton-bundlers-fossil-fuel-lobbyists
https://www.opensecrets.org/lobby/top.php?indexType=c&showYear=2015