A Compensation Ratio Game Equilibrium Study Of China's Non-tradable Share Reform Based On EWA Learning Model

From the view of behavioral game theory, we analyzed the compensation equilibrium problem of the listed companies' non-tradable shares reform in China from 2005 to 2007, and used EWA learning model to simulate its equilibrium process.Firstly, we briefly introduced this reform, pointing out its core issue is the compensation paid from the non-tradable shareholders to the tradable shareholders for the circulation rights. Based on game theory, we developed that this reform is equal to a multi-stage ultimatum game about the compensation between the non-tradable shareholders and the tradable shareholders. The equilibrium analysis showed that the rules of the compensation game were helpful to the non-tradable shareholders. Secondly, taking the thought of behavioral game theory into account, we thoroughly analyzed the game equilibrium's influence factors, and analyzed its formation mechanism using EWA learning theory, which indicated that as the impact of cognitive bias, the equilibrium may be away from the standard equilibrium due to players' strategy learning. Thirdly, we developed multiple linear regression models to demonstrate which factors made true influence on the compensation equilibrium. The demonstration results from a sample of 936 reformed firms showed that players behaved irrationally because of the anchoring effect.According to behavioral game theory, irrational decision-making will be transferred cumulatively due to players' strategy learning and finally make the equilibrium deviated from the standard equilibrium formed quickly. Therefore, we used EWA learning model to simulate its equilibrium process. The simulation results from the same sample showed that the EWA learning model successfully captured the equilibrium, which implicated that the process of the compensation game was based on strategy learning. By analyzing the model parameters, we found out that both non-tradable and tradable shareholders have strong learning ability in the decision-making, but which was just an irrational learning of pure strategy from history experience, and the unfair power in the game was the key reason leading to the unfair equilibrium.