Abstract: The role of FDI policy of host country in MNC's foreign investment activities is assessed in this paper. Models are developed based on the principal-agent approach to the games, and are tested on simulation results using the Latin Hyper-cube Sampling Monte Carlo Simulation method. It is found that the degree of risk aversion, scale of MNC and regulation for MNC have played important roles in MNC's work effort. Furthermore, the more income distribution MNC gets, the harder work MNC will try. In addition, under the policy of combined stimulation with regulation, it is proved that MSC and host country can both achieve mutual benefits and win-win corporation mechanism when they considering fairness and reciprocal. The results not only disentangle the effects of FDI policy in decisions and utility by model, but also provide the new approach to achieve the win-win mechanism. Some important guidance for MNC from China and policy-making are affered in this study.

Key words: multi-national corporation, FDI policy, evolutionary game, fairness and reciprocal, win-win corporation