Lobbying: influence under micro-targeting

<jats:title>Abstract</jats:title> <jats:p>Interest groups (IGs) can potentially influence policy making process or policy outcomes in their favor by using different lobbying tactics. In this paper, we study how and under what circumstances IGs exert influence on policy outcomes when they can use Micro-targeting (MT) as a lobbying strategy, i.e. the IGs can send group specific messages to a subset of voters. In the absence of IGs, the political candidate does not have means to privately commit a policy to a group of voters, who might vote for her after observing such policy commitment. Recognizing this, IGs can get policy favours from the political candidate in exchange for facilitating candidate’s private commitment. We identify conditions in which MT is influential, in the sense of leading to a different policy outcome in the presence of IGs. The analysis fully characterizes the set of influential MT equilibria. The like minded IG does not have any direct influence, but its presence could severely impact the direct influence of unlike minded IGs given that the competing candidates are ideologically motivated. Moreover, this may also lead to polarisation between the two competing candidates.</jats:p>