Game analysis of agent incentive and supervision problem

By using game theory and making an equilibrium analysis, the effect of incentive and supervision in overcoming the shortcomings of agent is analyzed. The paper analyzed how to make incentive and supervision mechanism more effective. Taking executive stock options as an example, as a long-term equity incentive way, the paper analyzes how to make the rational principal and agent achieve Nash equilibrium of (incentive, efforts). Finally, some revelations are got to combine with actual situation of China.