Preprint Article Version 1 This version is not peer-reviewed

Less Is More: Basing on Dynamic Mixed Game Analysis on the Real Estate Regulation Policy Between Central and Local Government in China

Version 1 : Received: 24 June 2018 / Approved: 26 June 2018 / Online: 26 June 2018 (09:46:57 CEST)

How to cite: Ma, W.; Zhang, R.; Ke, H. Less Is More: Basing on Dynamic Mixed Game Analysis on the Real Estate Regulation Policy Between Central and Local Government in China. Preprints 2018, 2018060406 (doi: 10.20944/preprints201806.0406.v1). Ma, W.; Zhang, R.; Ke, H. Less Is More: Basing on Dynamic Mixed Game Analysis on the Real Estate Regulation Policy Between Central and Local Government in China. Preprints 2018, 2018060406 (doi: 10.20944/preprints201806.0406.v1).

Abstract

Over the past decade, the high and rising housing prices in China, which have brought serious problems in people's livelihood, have attracted worldwide attention. The central government has constantly put forward some tight real estate regulation policies, while house prices still have not cooled down and continued to rise. In order to study this phenomenon, we try to analyze using game models: First, considering the simple model without a penalty mechanism, we find that the central and local government both has dominant strategies, and the Nash equilibrium formed is not Pareto optimal of the prisoner's dilemma. Second, a penalty mechanism considering local governments' policy boycott is introduced into mixed game model, trying to analyze the impact of the mechanism on both sides of the game. Interestingly, because of the asymmetry of information, the local would actively implement with the high level of resistance. In the end, the central government's deterrent force is considered into a dynamic mixed game, where exists a bayesian equilibrium. The results show that the central government can achieve the goal of policy by means of improving the efficiency of supervision and reducing the frequency of supervision. Managerial and theoretical implications are discussed.

Subject Areas

real estate regulation policy; dynamic mixed game; central government; local government; information asymmetry; Bayesian equilibrium

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