Abstract This paper studies the cooperation of a business incubator manager and an entrepreneur under the bilateral overconfidence circumstances that have an influence on the efforts and the effectiveness of both sides. We use Nash equilibrium and Stackelberg equilibrium to compare the overconfidence and fiscal policies on the impact of differences in behavior of both sides. Studies have shown that the overconfident business incubator manager and the entrepreneur enjoy a higher level of effort than rational ones in the Nash equilibrium and Stackelberg equilibrium. The greater of the degree of overconfidence is, the higher equilibrium level of effort the business incubator manager and the entrepreneur have. The interaction between managers and entrepreneurs has a positive impact on the success rate of startups, the greater impact is, the greater equilibrium level of effort is, no matter how rational or overconfident business incubator managers and entrepreneurs are. For overconfident entrepreneurs, the equilibrium efforts of Stackelberg model are higher than Nash model.
2014, Vol. 11 
