Perceived value of environmental regulation and environmental investment strategy choices of heavily polluting enterprises

Drawing on prospect theory and mental accounting, this study constructs a dynamic evolutionary game model involving the government, banks, and heavily polluting enterprises. It distinguishes between enterprises based on their initial willingness to engage in proactive environmental prevention, and explores how the carbon market and green credit influence the evolution of their environmental investment strategies, along with the underlying mechanisms. The findings reveal that increases in carbon prices or reductions in green credit interest rates primarily influence enterprises with either a high initial willingness or a neutral stance towards proactive environmental prevention, prompting a shift from end-of-pipe treatment to proactive investment strategies. Furthermore, the guiding effect of green credit is weaker than the driving effect of the carbon market. Mechanism analysis indicates that a decrease in the loss aversion coefficient enhances the perceived value of environmental regulations among enterprise managers through a multiplier effect, thereby encouraging proactive investment. A reduction in cost-related risk aversion and an increase in outcome-related risk preference have both enhancing (multiplier effect) and weakening (exponential effect) influences on managers’ perceived regulatory value. Changes in the loss aversion coefficient exert a stronger guiding influence on proactive investment than changes in risk preferences.