Measure and equilibrium analysis of financial innovation motivity based on game theory

By analyzing the interplay between government and financial institution as well as each behavior, a new model measuring financial innovation motivity has been obtained based on game theory. The financial innovation motivity was defined and measured in the government effective strategic set. The subgame perfect Nash equilibrium in grim strategies of government and financial institution was also proved and analyzed. The results show that one-period finite extended game will generate inferior strategies leading to "a trap blocking financial innovation", while infinitely repeated games will generate best dominant strategies for an players' decisions. Besides, the main variables have been given out taking account the heterogeneity in players' payoff when developing the infinitely repeated games model. The model constructs a span-new frame for studying the competitive and strategic interplay between players in financial innovation.