Analysis for Adverse Selection of Venture Enterprise in IPO Market Based on Evolutionary Game Theory

In IPO market, because of the information asymmetry between venture capitalists and external investors, adverse selection will happen, and reputation can reduce and avoid such problem. The reputation plays an incentive role on venture capitalists, which can promote their continuous evolution. Combining evolutionary game theory and replicator dynamics equation, this paper discusses the evolutionary process of choosing strategy from the limited-rationality venture capitalists, and does useful exploration in the applications of the evolutionary game theory to the problem of adverse selection.