Principal-Agent Theory Based On Reciprocity Preference And Its Contribution To Harmonious Economy

China is constructing a socialist harmonious society, in which economic harmony is an important aspect of the harmonious society. The economic harmony implicitly includes not only the fairness and reciprocity among economic behavior individuals, but also the altruism preference. In classical economics, the basic assumption on economic behavior individuals is that they are purely rational economic persons. Based on this assumption, the classic economic theory holds that economic behavior individuals purely look for maximizing their personal interests and are selfish. This, to some extent, intensifies the contradiction and conflicts and hampers the construction of the harmonious society. Recently, research in behavioral economics and experimental economics indicate that economic behavior individuals are bounded rationale. According to this assumption, economic individuals have altruism preference, and fairness, reciprocity and cooperation exist among them, which make up the internal components of constructing the harmonious society. In this thesis, theories and methods such as behavioral economics, information economics, evolutionary game theory etc are applied to study economic behavior individuals'altruism preference with bounded rationality and their reciprocity behaviors based on this preference. Stemmed from the literature, the fairness and reciprocity theory in behavioral economics is integrated with the principal-agent theory in information economics to construct a principal-agent model based on reciprocity theory so as to study the mechanism in which reciprocity exists among individuals. The evolutionary stable strategy in evolutionary game theory is applied to study the possibility and stability of transferring from individual reciprocity to group reciprocity. At the same time, structural equation modeling is applied to do empirical study on the existing and enabling mechanism of reciprocity within teams and companies. Consequently, a microeconomic theory basis is developed to construct a harmonious society and thus promoting the construction of the harmonious society.Fist, this thesis summarized the theoretical production of reciprocity preference of behavioral economics and experimental economics. The thought of fairness and reciprocity can be originally sourced from the write of Simth. Subsequently, Simon put forward the theory of limited rationality. He established the theoretical foundation of behavioral economics. By the effort of Kahneman and Tversky, which combined the research of psychology and economics, prospect theory and mental accounting theory be put forward. Hence, behavioral economics step into a growth stage, and make the studies on the theory of reciprocity preference come to flourish. Rabin, Thaler and Bolton constructed the mathematical model about the theory of reciprocity preference, which deepened the research. All of those research established the theoretical foundation of this thesis, and provided the theoretical model and analysis method. Based on those research, in virtue of the theoretical research production of behavioral economics and experimental economics, this thesis incorporate the theory of reciprocity preference into the principal-agent theory of information economics. Accordingly, this thesis analyzed the fairness, reciprocity and harmoniousness in the real society. Second, based on the literature, in this thesis the concept of fairness game is transplanted into the current principal-agent model to formulate a new principal-agent model, in which the agent shows irrational behavior of reciprocity. The study indicates that, the optimal contract resulting from the current standard principal-agent model is not a state of Pareto optimality. The new model can bring higher level of profit. The study of integrating behavioral economics with current motivation theory can explain the formation of many featured cultures, especially the human-based management of companies in reciprocal environment.Third, based on the basic assumption of reciprocity preference in behavioral economics, this thesis analyzes the effects of behavioral game among individuals. Evolutionary game theory is applied to study the evolutionary path from individual economic behavior to group economic behavior. The study shows that the behavioral gaming between individuals having reciprocity preferences can improve the economic interests of the two gaming parties. Further, there exists the evolutionary stable strategy transferring the group economic behavior from egoism to reciprocity. This study provides microeconomic theory basis for the construction of the harmonious society, that is, the construction of the harmonious society in a reciprocal environment can be divided into two levels: individual behavioral harmony and group behavioral harmony. Based on the individual behavioral harmony, with the application of evolutionary theory, the group behavior harmony and even the social behavior harmony can be accomplished. Consequently, the path evolutionary mechanism of constructing the harmonious society can be reasonably established and provides the microeconomic theory basis for the construction of the harmonious society.Lastly, in this thesis structural equation modeling is applied to conduct empirical testing on R&D teams'technology innovation capacity in a reciprocal environment, reciprocity preference and its relevance to company performance, and the reciprocity of companies'core competitiveness. The results showed that, the reciprocity behavior among team members can effectively increase the centripetal force and cohesion of the team, as well as improving the team's economic effect; The reciprocity motives and behaviors of employers can significantly increase the loyalty and efforts of their employees. The reciprocal management strategies of the employers, through reciprocal behaviors of the employees, can significantly improve the operational performance of their companies. The reciprocal preference can directly increase the stability of the employee's psychological contract. With the transmitting mechanism of a series of management paths, the core competitiveness of the company can finally be improved. Therefore, the reciprocal preference should be implemented as a new management concept and as a new management action, and its motivation function on China's company operations will be reflected in the future's implementation strategies .