Game Analysis On Acts In The Regulation Of The Stock Market

The stock market in China has established since the 20th century, 90's, and the development of more than a decade which is very short-lived compared with those developed capitalist countries. Tokyo Stock Exchange had 200 years of history, and so the New York had. During the process of the development of U.S. economy, the stock market support the financing of U.S. federal government in the war, and which had expand the great interests in the second world wars, so the market makes a natural adjustment of social resources to achieve a perfect allocation of resources. Therefore, the stock market in the U.S. is perfect, because it plays roles of investment, financing, resource allocation and economic barometer. Although the pace of development in stock market of China is relatively fast, the securities market is a typical emerging market, and the process of development is accompanied by government policies which also have a certain degree of uncertainty. Many people believe that the securities industry is a special kind of industry that is to reduce the market friction and transaction costs, to prevent market manipulation and other acts, in order to reduce the risk of the stock market. Therefore, the attitude of scholars in the process of changes in the market, there must be so much government support and control as to achieve the effect of market stability. Many Western economists have given up the trust of Adam Smith's "invisible hand", and they realized that the market itself is flawed and it is impossible to achieve the best allocation of resources in today's market environment if we want to rely only on the market self-regulation. This is the non-external economic problem. So, the operation of the Government to intervene in the market to correct market imperfections, and the provision of public goods are to meet the needs of the community.The GDP in China has maintained a sustained growth, and more than 7 percent, while the stock market since showed the trend of unilateralism fell. During this period, the relevant government departments issued a lot of good policy, but it is difficult to change the trend of the stock market fell. The stock market is to optimize the allocation of resources, financing and the role of capital pricing in market economy. As to the government and the stock market, the government's actions are reasonable to have a certain scope. Government's role in the stock market is parallel to market economy .At the beginning of the establishment of the market, market efficiency is an increasing function of the government's actions, but the government action is opposite with market behavior along with the continuous development and improvement of stock market .There is an excellent point between the government action with the market behavior. If the government's actions over the best point, the government's conduct is inappropriate and will not play a catalytic role in the economy. Therefore, the government's active role is uncertain at the initial development period of the stock market, and similarly, the policy is uncertain and investors are at a loss. However, with the further development of the stock market, investors have firm confidence on the stock market step by step and slowly get the trust of everyone. We generally share the view that the stock market should play a fundamental role in allocation of resources, but the reasonable government intervention when the market failure. The failure of China's market at this stage is divided into three types: the first is common; the second is due to inadequate market development and unsound economic structure; the third is due to too much or improperly government intervention in the economy. From the history of the development of the stock market, no market can completely rely on the inherent law of the market maintain its own fully rational, and are in varying degrees by the impact of government action, the reasons for the stock market is not perfect and effective, but the existence of market failure, the government act to correct market failure is the only principal, has an irreplaceable role. When the government introduced a policy ,he should considered well, because the same policy in the same time not likely to be no market reaction, so at the right time, right out of the policy is very important to control the stock market is not only a means is also an art. This paper is divided into four parts as follows. The first part mainly introduced the background of paper topics, as well as the structure. On China's stock market and the relationship between the government's actions, the government's actions to promote the development of the stock market. The second part is the stock market literature review of government action. It summarized into two points, the first is is the theory of financial crisis for the carding; the second point is the theory of the government's actions which were reviewed empirical studies, mainly on the economics of the game on the elaborate and descriptions. The third part is the analysis of the effects of stock market and government action. First of all, we set the utility function of the Government to investors. Utility investors are drawn from capital gains and dividend from the decision. And it arrived when government intervention is less than the proceeds received by speculation the government does not interfere when the speculative gains. At the same time also on the Government's regulatory authorities have the time to supervise and control the stock market so as to enable the development of stock market stability. Secondly, we do the analysis of the balanced game between government and the investors. We set the expected utility function of investors, stock prices were low in the market and the market both cases the high stock price, between the Government and investors to analyze the course of the game. When the stock price is low, it is divided into two situations, favorable government policies and good policies are not out to see the choice of investors and repeated so as to achieve a balanced state of the game. When the stock price is high, it is also divided into two situations. The outline of the bad policies or not should to see the choice of investors in the game repeatedly to achieve balanced state. Finally, we concluded a summary of the factors about a balanced game of hindering the formation. At the same time, we proved that acts of the Chinese government on the stock market are positive from the perspective of investors. The fourth part is some of the typical country in times of economic crisis and the situation of performance. It related to introduce in Europe in which Russia and the United Kingdom, the United States of America, Mexico and Argentina and other countries such as Asia Japan, Hong Kong, Taiwan, Thailand, and so the typical country. Financial crisis is associated in nature; the Government of most countries has taken the appropriate policies to save the stock market in the face of financial crisis. The last part is the conclusion. In this paper, we used the game theory in the stock market to analysis the conduct of the government and the investors, and designed the utility function between government and the investors, as well as the investors and the government formation process of a balanced game. Therefore, we concluded that with the rational development of the market, the behavior between investors and government will formed the game balanced and rational development to achieve the objectives of the stock market.