Government Incentives and Moral Hazard Prevention in Building Energy Efficiency

In accordance with the game theory, the department of government energy management cannot fully control with the actual fund and the energy-saving effect of all types of building in incomplete information. This paper uses the theory of principal-agency to construct an effective incentive and punishment mechanism for the government management to the building owners´ strategies. Analysis showed that under risk neutral condition, an effective budget-balancing mechanism did not exit, and the paper constructed a non-budget-balancing mechanism. If the building owners are all fully risk averse in reducing the fund of energy-saving, it is proved that a budget-balancing mechanism exits, which can effectively encourage the building owners increasing the fund of energy-saving and abiding the laws of energy-saving.