Game Theory Analysis Of Chinese Local Government's Behaviors Model Under Fiscal Decentralization

As the Theory of Fiscal Decentralization develops and practice moves forward, the fiscal power and the relevant power in affairs are transferred to local governments which become the main body to promote various reforms in the regional development. Reforms cover both financial areas and political areas. How does a rational local government choose the behavior model when faced with the special external and internal environment? Actually, there're theories used for reference.The author argues that the formation of local governments' behavior models depends on the equilibrium which game participants establish when they are faced with different strategies. The article builds a behavior model of the local government under the Evolutionary Game Theory and uses it to analyze the problem. The Evolutionary Game Theory is not only useful in studying the game equilibrium of local governments' behavior models in the individual domain (the political domain) and but also is used in evolution of trans-domains, analyzing the development of local governments' behavior models. The present study finds that the discussion is concluded with the heterogeneity of behavior models in the political domain if the behavior model of Chinese local governments is discussed under the evolutionary model, while homogeneity in the domain of public resources.Concerning on the problem and the argumentation, the article combines the theory modeling with practices, employing the economics of systems as well as game theory in expounding and solving this problem.The article is divided into 4 main parts: literature review, theory modeling, analysis of game equilibrium, as well as empirical study and suggestions on policies.The first chapter explains the initiative and the research methods based on the researches at home and abroad. The second chapter establishes a general game model of local governments'behavior models, including the subjective game model (used in explaining relatively static equilibriums in government gaming) and the evolutionary game model (used in expounding the evolution in various domains). The third chapter proposes the heterogeneity in the gaming equilibrium of our local governments' behavior models in the financial and political domains, which is then supported by empirical evidences. The forth chapter proposes the homogeneity of our local governments' behavior models in the domain of public resources, and then it testifies the existence of the problem through the structural statistics of public financial expenditure. The last part is the conclusion and a proposal on evolutionary route of local governments' behavior models.