The Analysis Of Effectiveness On China's Stock Market Based On The Game Between Makers And Retails

The tide of China's financial reform since the late1970in the20th century, promote there-initiation and development of the capital market. In the past few decades, China's stockmarket have developed rapidly, which is from scratch, from small to large, from regional tothe country. A large number of enterprises raise funds through the stock market, whichprovide a strong financial support for the development of enterprise and is playing a crucialrole in business's development and growth. So the function that the optimal allocation ofresources from the stock market has played in China's economy is more and more visible andimportant. However how well the allocation of resources of the stock market plays mainlydepends on whether the efficiency of the stock market effectively can be improved. Theefficiency of stock market is mainly the efficiency of adjusting and allocating funds, that is,whether the stock market can effectively allocate the funds to the enterprise which can bestenable the funds to play a role. The efficiency of the stock market can be divided into twoaspects, one is the internal efficiency and the other is external efficiency. The internalefficiency is the efficiency of trading operations in the stock market. It reflects the stockmarket's ability to pay the lowest cost for the investor to complete the transaction within theshortest time, which is embodies of organization function and service function of the stockmarket. The external efficiency is the efficiency of distributing funds of the stock market, itreflects whether the price of the financial products in the stock market can make a timelyresponse according to the relevant information, which is the embodies of adjusting andallocating funds of the stock market. External efficiency is the lore of financial marketefficiency, and the internal efficiency can affect external efficiency inevitably, thereforeincrease the external efficiency of the stock market is particularly important.Stock trading process is a process of transferring and redistributing interests, the wealthtransfer between the investors and listed companies, between the dealer and retail andbetween the retails. But overall, the retail is the weaker of the funds and the weaker of theinformation, also the weaker in the stock market. The makers can suppress and trick retailsthrough their financial advantage, so the funs vulnerable often leads to information vulnerable.The process that makers obtain excess return through their information advantage, in fact controls the flow of funds in the market, which make the funds can not realize the optimalallocation according to the market trends, that can reduce he external efficiency of the stockmarket, also reduce the effectiveness of the stock market from overall, which seriously hinderthe development of the stock market and affect other industries that are closely linked to thefinancial industry and restrict the development of the whole economy.Considering the problems that exist in China's stock market and the urgency of solvingthe problems, this paper study and analyze from the following aspects:First of all, by collecting and collating a lot of information about financial markets, stockmarkets and the effectiveness of the stock markets, this article summarize related concepts,characteristics, development history and current situation, the strategies of investors, theabnormal of stock market and the effectiveness etc. And this article detailed described thedevelopment and the necessity and urgency of solving these problems.Second, from the point of view of the stock market participants makers and retail, thisarticle use game theory tools to analyze the stock market. Under complete information, thisarticle build static Clever Pig Game, and conclude that under complete information the stockmarkets are efficient, the funds can realize optimal allocation according to the market demand,and this is the perfect state that stock market want to achieve, but the current situation can notachieve the conditions of complete information. So modify the assumptions of the modelestablish a dynamic Signal Game model under incomplete information. Analyze the model,we can find that using the information that the dealer send the signals can effectively narrowthe gap of information between the retail and markets, which can improve the effectiveness ofthe stock market, but the result is less stable and the results are obviously affected by thesubjective factors of the retail. Then this article further modify the model, add theHypothesized Motion, and find after adding the Hypothesized Motion, this model absorb itsshortcomings, result in a more stable results.Finally, this article theoretically proves the consistency of the Hypothesized Motion andensures the stability of the results by computer simulation method. This article simulate theincome of the retail, confirm the Signal Game model with Hypothesized Motion caneffectively reduce the information gap between the makers and the retail, which can improvethe external efficiency of the stock market, achieve the optimal allocation of resources.