The Vicious Cycle: Fundraising and Perceived Viability in Us Presidential Primaries

Abstract

Since at least Aldrich (1980a), a dynamic positive feedback loop between fundraising and electoral success has been hypothesized. Existing work on both directions of this feedback remains inconclusive and is often explicitly cross-sectional, ignoring the dynamic aspect of the hypothesis. Pairing high frequency FEC data on contributions and expenditures with Iowa Electronic Markets data on perceived probability of victory, we examine the bidirectional feedback between contributions and viability in a series of analyses. We find positive feedback in both directions during a successful insurgent-candidates’ breakout from obscurity. This suggests the existence of multiple steady states. The implications for the efficiency of the primary process, and hence the system of public choice, are stark: if positive feedback exists, then high quality candidates might languish in obscurity while lesser, initially prominent candidates remain better known and better funded.