Negotiation Transaction Cost of PPP Based on the Cumulative Prospect-Evolutionary Game Model

Transaction cost varies with different project types. The execution of PPP projects is also subject to transaction cost. Hence, calculation and optimization transaction cost will provide appropriate implementation plan for the project. Basing on bounded rationality, this article proposes the cumulative prospect-evolutionary game model to analyze the relationship between frequency and transaction cost. Using time dependent pricing model and behavior dependent pricing model to match three different game tactics that include without interference by both, affected by one party and interference by both, it will obtain negotiation terms that accepted by two game parties. Then, the metrology relationship among negotiation transaction cost, frequency and once negotiation pricing will be received by using those negotiation terms. Finally, collecting a PPP project’s information, empirical analysis of design changes negotiation obtains several results. The higher the frequency of negotiations, the greater the transaction costs. If frequency rises twice, the transaction cost will increase about 2%. The third of the two sides of the game offer the less concessions, the higher the frequency of reconciliation. If the first bargainer compromises falling about 3%, the frequency that achieve reconciliation will enhance twice. The transaction cost of the former who offers a price earlier is more expensive than the later 1.125 (10 thousand, RMB). This method will provide a reference way for optimizing transaction cost of PPP projects.