Forest insurance market participants’ game behavior in China: An analysis based on tripartite dynamic game model

Abstract

Purpose: In forest insurance market, there are three main participants including the insurance company, the forest farmer and the government. As different participant has different benefit object, there will be a complex and dynamic game relationship among all participants. The purpose of this paper is to make the game relationship among all participants in forest insurance market clear, and then to put forward some policy suggestions on the implementation of forest insurance from the view of game theory.

Design/methodology/approach: Firstly, the static game model between the insurance company and the forest farmer is set up. According to the result of static game model, it’s difficult to implement forest insurance without government. Secondly, the tripartite dynamic game model among the government, the insurance company and the forest farmer is proposed, and the equilibrium solution of tripartite dynamic game model is acquired. Finally, the behavioral characteristics of all participants are analyzed according to the equilibrium solution of tripartite dynamic game model.

Findings: the government’s allowance will be an important positive factor to implement forest insurance. The loss of the insurance company, which the lower insurance premium brings, can be compensated by the allowance from the government. The more the government provides allowance, the more actively the insurance company will implement forest insurance at a low insurance premium. In this situation, the forest farmer will be more likely to purchase the forest insurance, then the scope of forest insurance implementation will expend.

Originality/value: There is a complex and dynamic game relationship among all participants in forest insurance market. Based on the tripartite dynamic game model, to make the game relationship between each participant clear is conducive to the implementation of forest insurance market in China.