TITLE:
Benefit Analysis of Environmental Protection Investment Based on Reciprocity Theory
AUTHORS:
Chenyuan Zhao, Tiantian Xiang, Huan Peng
KEYWORDS:
Environmental Protection, Green Finance, Reciprocity, Principal-Agent Model
JOURNAL NAME:
Theoretical Economics Letters,
Vol.8 No.15,
November
29,
2018
ABSTRACT: This paper abandons the “rational man” hypothesis in
traditional economics and utilizes the existing “reciprocal” principal-agent model (Pu Y. J, 2007) to
analyze the benefits of environmental protection inputs. The results of the
study show that if humans increase their environmental investment on the basis
of rational input is set to , naturally, the increase in revenue under the
assumption of “reciprocity” is r,
when η > 2r, the environmental investment made by humans under irrational
assumptions can bring Higher income level than “rational people”. Thus, the
enlightenment of government behavior is: first, the government should fully
recognize the “reciprocal” characteristics of the natural environment when formulating
environmental protection policies; second, the government should further
increase investment on the basis of rational input, when the increased
investment meets the aforementioned conditions, the purpose of increasing human
income can be achieved.