Games on Production Safety between Employer and Employee without and with Government Regulation

The process of establishing labor-capital relationship between enterprise and employee is a game. The game model of imperfect information between employer and employee on production safety is developed, and its equilibrium solution is solved and discussed. Then government regulation is introduced to that game and the new equilibrium solution is re-analyzed. We find that the probability of enterprise’ s giving up concealing the bad safety condition is related to the camouflage cost, and the government can solve the asymmetric information on production safety between employer and employee mainly by controlling supervision frequency, employee’ s compensation from enterprise which concealed its bad safety condition and camouflage cost.