Game-Theoretic Analysis of Blockchain-Based Intellectual Property Rights Pledge Financing

Intellectual property rights (IPR) pledge financing is an innovative approach for financing technology-based small and medium-sized enterprises (SMEs). However, concerns about the valuation and liquidity of IPR impede the growth of this financing sector. Firms possess the full information about the value of collateralized IPR, whereas banks, being less informed, rely on signals transmitted by firms to make decisions. To address the risks of information asymmetry between firms and banks, we employ signaling game theory, which models scenarios with incomplete information. We first analyze the traditional scenario, elucidating the reasons, and consequences of firms’ deceptive behaviors on banks’ revenues. Subsequently, to address the signal failure, we consider the adoption of blockchain to enhance information transparency. Under the blockchain scenario, the technology investment level chosen by banks simultaneously influences both the technology costs and the probability of detecting fraudulent activities. A credible reward and penalty mechanism is established based on the increased transparency. The findings indicate that blockchain adoption can decrease the fraudulent behaviors of firms and yield greater benefits for banks and firms under specific conditions. This study shows that blockchain serves as an innovation mechanism in the IPR pledge financing, rather than merely an efficiency enhancer.