Strategic interactions and market equilibrium in China's agricultural catastrophic insurance

Abstract

In China's agricultural catastrophe insurance market, issues of non-equilibrium are prominent. To understand the causes of non-equilibrium in agricultural catastrophe insurance and to develop prevention strategies, this study employs an Evolutionary Game Model, incorporating disaster and insurance data for three types of cereal crops in Henan Province to analyse the Evolutionarily Stable Strategies in the agricultural catastrophe insurance market. The research also considers government policies and disaster reinsurance as implicit participants in the model. The findings reveal significant differences in the impact of non-equilibrium in the agricultural catastrophe insurance market and the choice of game strategies, dependent on the scale of farm operations, the type of crops cultivated, and regional variations. Significantly, decision-making evolutionary paths vary between small and medium-scale farmers, with rice growers emphasising income insurance more. In regions prone to frequent catastrophes, the insurance rates for agricultural catastrophe insurance exhibit greater flexibility. By scientifically delineating agricultural catastrophe risk zones, appropriately expanding the scale of cultivation, reducing insurance rates, and adjusting agricultural catastrophe insurance products, a balanced development in the agricultural catastrophe insurance market can be promoted.

Keywords

• agricultural insurance
• evolutionary game theory
• non-equilibrium problem
• numerical simulation analysis
• time sequence dynamics