Preferencje help
Widoczny [Schowaj] Abstrakt
Liczba wyników
2015 | 23 | nr 3 | 47--70
Tytuł artykułu

Analysis of Ineffectiveness Arising in "Investor-government" Relations

Treść / Zawartość
Warianty tytułu
Języki publikacji
Purpose: This article deals with the problem of forming Pareto non-optimal norms of mutual behavior of investors and government in the process of decision-making related to financing designed to reduce risks in investment activity.

Methodology: Considering the interdependent type (nature) of interactions between related parties, game theory tools were used to model such interactions. Much attention was directed to search for parameters of interaction leading to certain Nash equilibriums in pure strategies. The formal results obtained with the model were verified by statistical analysis.

Findings: Analysis showed that the rational behavior of related parties can lead to unexpected results. Powerful investors will aim to work in socially-oriented economies, whereas primarily small investors will operate in most liberal economies with a minimum tax burden but with a higher level of risk. As for governments' behaviors, the images are the same: small economies tend to liberalize their tax systems and to secure investment faster than powerful ones. Empirical verification based on statistical data of groups of countries generally confirmed the conclusions. These formal and logical conclusions were from statistical analysis of 124 countries divided into 5 groups: OECD countries, post-socialist countries, Latin American countries, APAC countries and ACP countries. Provided that the more powerful ones are covered economies, there was stronger interdependence between the size of economies and tax burden and also between total investment and tax burden, where this dependence is positive.

Originality: The results obtained used Nash equilibriums in pure strategies as models of behavioral norms to define behaviors of related parties and also to explain assumptions concerning the behaviors of investors and government. (original abstract)
Opis fizyczny
  • National Academy of Sciences of Ukraine, Kyiv, Ukraine
  • State Fiscal Service of Ukraine, Irpin, Kyiv, Ukraine
  • Agnew, J. (2003). Inefficient Choices in 401(k) Plans: Evidence from Individual Level Data. Manuscript in preparation. The College of William and Mary.
  • Algozhina, A. (2012). Monetary and fiscal policy interactions in an emerging open economy exposed to sudden stops shock: a DSGE approach. FIW Working Paper, 94.
  • Anand, P. and Cowton, C.J. (1993). The ethical investor: Exploring dimensions of investment behavior. Journal of Economic Psychology, 14(2): 377-385,
  • Barbosa, D., Carvalho, V.M. and Pereira, P.J. (2013). The Interaction between Firms and Government in the context of Investment Decisions: A Real Options Approach. FEP Working Papers, 507.
  • Besley, T. (1994). How Do Market Failures Justify Interventions in Rural Credit Markets? The World Bank Research Observer, 9(1): 27-47,
  • BIS: (2011). International Trade and Investment - the Economic Rationale for Government Support. BIS Economics Paper, 13.
  • Cao J., Hu, L. and Yao, Q. (2014). Game Analysis of Reverse Supply Chain Based on Government Regulation. Advanced Materials Research, 915-916: 1528-1531,
  • Carlin, B.I., Gervais, S. and Manso, G. (2013). Libertarian Paternalism, Information Production, and Financial Decision Making. Review of Financial Studies, 26: 2204-2228, 10.1093/rfs/hht025
  • Cassar, G. and Friedman, H. (2007). Does overconfidence Affect entrepreneurial Investment? Wharton Research Scholars Journal, 5(1): 1-31.
  • Dittrich, D.A.V., Güth, W. and Maciejovsky, B. (2005). Overconfidence in investment decisions: An experimental approach. The European Journal of Finance, 11(6): 471-491,
  • Gayle, A.C. and Martinez, A. (2008). The Influence of Government Policy and NGOs on Capturing Private Investment. OECD Global Forum on International Investment, 27-28 March.
  • Gillingham, K. and Sweeney, J. (2010). Market Failure and the Structure of Externalities. In: A.J. Padilla and R. Schmalensee (eds.), Harnessing Renewable Energy: RFF Press.
  • Iyengar, S.S. and Kamenica, E. (2010). Choice proliferation, simplicity seeking, and asset Allocation. Journal Public Economics, 94: 530-539,
  • James, S. (2009). Incentives and Investments: Evidence and Policy Implications. Investment Climate Advisory Services of the World Bank Group.
  • Kahneman, D. and Tversky, A. (1979). Prospect Theory: An Analysis of Decision under Risk. Econometrica, 47(2): 263-292,
  • Kent, D., Hirshleiferc, D. and Siew Hong, T. (2002). Investor psychology in capital markets: evidence and policy implications. Journal of Monetary Economics, 49: 139-209,
  • Medda, F. (2007). A game theory approach for the allocation of risks in transport public private partnerships. International Journal of Project Management, 25(3): 213-218,
  • Meer K. van der and Noordam, M. (2004). The Use of Grants to Address Market Failures. A Review of World Bank Rural Development Projects. Agriculture and Rural Development Discussion Paper, 27: The World Bank.
  • Miguel, V. de, Garlappi, L. and Uppal, R. (2009). Optimal versus Naive Diversification: How Inefficient Is the 1/N Portfolio Strategy? The Review of Financial Studies, 22(5): 1915-1953, http://dx.
  • OECD (2007). Tax Effects on Foreign Direct Investment. Recent Evidence and Policy Analysis,
  • OECD (2008). Tax Effects on Foreign Direct Investment. Policy Brief. OECD Observer.
  • Parys, S. van, James, S. (2010). The effectiveness of tax incentives in attracting investment: panel data evidence from the CFA Franc zone. Int. Tax Public Finance, 17: 400-429, 10.1007/s10797-010-9140-1
  • Pflug, G.Ch., Pichler, A. and Wozabal, D. (2012). The 1/N investment strategy is optimal under high model ambiguity. Journal of Banking & Finance, 36(2): 410-417,
  • Tapia, W. and Yermo, J. (2007). Implications of Behavioural Economics for Mandatory Individual Account Pension Systems. OECD Working Papers on Insurance and Private Pensions, 11: OECD Publishing,
  • Tirole, J. (2006). Theory of Corporate Finance. N.J.: Princeton University Press.
  • Tirole, J. (2012). Overcoming Adverse Selection: How Public Intervention Can Restore Market Functioning. American Economic Review, 102(1): 29-59,
  • UNCTAD (2012). Investment law reform a Handbook for development practitioners. Investment climate advisory services of the World Bank Group June 2010: Investment Policy Framework for Sustainable Development UNCTAD.
  • Vivoda, V. (2011). Bargaining Model for the International Oil Industry. Business and Politics, 13(4): 1-34,
  • Žilinskė, A. (2010). Negative and Positive Effects of Foreign Direct Investment. Economics and Management, 15: 332-336.
Typ dokumentu
Identyfikator YADDA

Zgłoszenie zostało wysłane

Zgłoszenie zostało wysłane

Musisz być zalogowany aby pisać komentarze.
JavaScript jest wyłączony w Twojej przeglądarce internetowej. Włącz go, a następnie odśwież stronę, aby móc w pełni z niej korzystać.