This paper presents a game model in which insiders,selling stock in both the initial public offerings and the secondary market,have private information about their firm’s asset qualities,and outside investors only know the quality distribution.A pooling equilibrium is always resulted from large information asymmetry inherent in Chinese stock primary market.
A game model is usually decided by three factors:players,strategies and pay-off functions.It’s easier to define the players and their strategies than their pay-off functions.Mostly,the pay-off functions need to be estimated,and the difference estimations could bring about the difference Nash equilibria.
