Evolutionary game of investors’ opportunistic behaviour during the operational period in PPP projects

Jicai Liu, Ruolan Gao, Charles Yuen Jen Cheah and Jian Luo

Construction Management and Economics, 2017, vol. 35, issue 3, 137-153

Abstract: In public–private partnership (PPP) projects, during the operational period, private investors are prone to act opportunistically in pursuit of their own gain. Based on the perspectives of government’s administrative supervisory functions, this paper analyses the issue of strategic choice for opportunistic behaviour by the government and private investors during the operational period of projects using evolutionary game theory. The results show that there is not a single set of evolutionarily stable strategies (ESS) between the government and the investors. The end results of the evolutionary game are related to the initial states of the system. Conditions that would dissuade investors from adopting an opportunistic behaviour, and settings that would encourage government to supervise closely, are explored. Punishments set by the government, which would then lead to different ultimate choices made by these two parties, are also discussed. Finally, the paper proposes a few policy recommendations for government supervision on the basis of parametric analysis. The findings also serve as a reference for the decision-making process of the government and the investors.

Date: 2017
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:taf:conmgt:v:35:y:2017:i:3:p:137-153

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DOI: 10.1080/01446193.2016.1237033

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