Evolutionary Game Analysis on Innovation Behavior of Digital Financial Enterprises under the Dynamic Reward and Punishment Mechanism of Government

Digital financial innovation is a new impetus for economic and social development. However, lack of regulation will also have a huge impact on economic and social development. In this paper, an evolutionary game model of digital finance innovation is constructed, the evolutionary strategies of both sides of the game are discussed, and a simulation analysis is carried out, based on the dynamic reward and punishment mechanism of the government. The results show that the system can achieve evolutionary stability under the dynamic reward and punishment mechanism, and that the evolutionarily stable strategy is unique. We also find that when the punishment of regulators increases, the probability of compliance innovation of digital financial enterprises will increase, and the probability of active supervision of regulatory agencies will decrease. When regulators increase incentives, the probability of the compliance innovation of digital financial enterprises will decrease. Similarly, the probability of active supervision by regulators will also decrease and the decrease will be more obvious. To achieve the win-win development of digital financial innovation and regulation, it is necessary to continuously improve the regulatory capacity and level, reduce regulatory costs, and build a dynamic reward and punishment mechanism. Our research contributes to enhancing compliance innovation in digital financial enterprises.