Abstract: IPO's efficiency is a hot research spot, however, there is no special research on the relation between IPO modes and its efficiency. Existing literature shows IPO that in essence is a kind of systematic arrangement and game phenomenon. A new research method based on the relationship between the number of retail investors involving IPO modes and its efficiency from its evolving course is proposed. The game models constructed based on incentive compatibility and individual rationality disclose that IPO modes fully ruling out retail investors have little efficiency, the modes with the completely participation of retail inrestors possess Pareto optimal efficiency, and the modes having limited participation of retail investirs have the efficiency between these tow efficiencies. Finally, the suggestion that decrease unnecessary middle links and build a directly interactiv market mechanism between listed-company and investors are put forward.

Key words: IPO mode, allocation efficiency of resources, mechanism design, incentive compatibility, game analysis