Abstract: In PPP projects, investor speculation will damage the public interest and even affect the success of the project. Therefore, many government regulatory structures have been studied. However, considering the cost-effectiveness and perception bias of the government and investors, there is often the possibility that the incentive paradox will lead to invalid supervision. It is necessary to consider third parties from outside the regulatory structure to achieve effective regulation. Therefore, based on the prospect theory and the assumption of bounded rationality, the game revenue perception matrix is established and analyzed which introduces the administrative supervision mechanism of higher-level government departments. This can provide a theoretical basis for strategies to suppress speculation by investors in PPP projects. Studies have shown that the participation of higher-level government departments in the supervision of PPP projects has a significant effect on curbing investor speculation. Increasing the reference point of the project's basic performance standards, the penalty factor of the project, and the supervision probability of higher-level government departments can achieve the purpose of suppressing investor speculation. The effects of reward coefficients, local government supervision costs, and local government political performance penalties on suppressing investor speculation vary according to the initial project conditions. Formulating different supervision strategies according to the initial conditions of the project will facilitate the improvement of the PPP project supervision system and promote the sustainable development of the PPP project.

Key words: PPP project；government supervision mechanism；prospect theory；evolutionary game theory