A government employee can exert effort e e [0,1] to produce a good. Effort has a cost ce?/2 and is unobservable. The probability that the good is produced is e and each citizen gets u(n) utility for an arbitrary, given n if the good is produced but 0 otherwise. One citizen is a monitor who can a cost am2 to observe whether the good was produced or not, and the monitor can successfully determine whether or not the good was produced with the probability m. If he is successful, he pays a cost s to share the information with everyone else. If the government employee does not produce the good and the monitor informs everyone else, the government employee gets punished and has to pay p. The timing of this game goes as follows: Monitor announces m Government employee chooses e Payoffs are realized What effort would the government employee choose if m=0.13, c=0.15, and p=0.9? Enter numeric value to the nearest two decimal places, rounding if necessary: What is the maximization problem of the monitor? The answer is in the format maxn((Termi) + (-1/2 am) + (Term3)) Choose the first term (Terma): a. u(n)(1-m) b. une C. u(n)s d. u(n)(1-e) e. u(n)m f. (n)(1-5) What is the maximization problem of the monitor? The answer is in the format max((Termi) + (-1/2 am) + (Term3)) Choose the third term (Term3): a. ms(1-e) b. s1/2 ce? C. ms(e) d. -ms(e) e. -1/2 ce? f. 1/2 ce? g. -ms(1-e) h. -51/ ce A government employee can exert effort e e [0,1] to produce a good. Effort has a cost ce?/2 and is unobservable. The probability that the good is produced is e and each citizen gets u(n) utility for an arbitrary, given n if the good is produced but 0 otherwise. One citizen is a monitor who can a cost am2 to observe whether the good was produced or not, and the monitor can successfully determine whether or not the good was produced with the probability m. If he is successful, he pays a cost s to share the information with everyone else. If the government employee does not produce the good and the monitor informs everyone else, the government employee gets punished and has to pay p. The timing of this game goes as follows: Monitor announces m Government employee chooses e Payoffs are realized What effort would the government employee choose if m=0.13, c=0.15, and p=0.9? Enter numeric value to the nearest two decimal places, rounding if necessary: What is the maximization problem of the monitor? The answer is in the format maxn((Termi) + (-1/2 am) + (Term3)) Choose the first term (Terma): a. u(n)(1-m) b. une C. u(n)s d. u(n)(1-e) e. u(n)m f. (n)(1-5) What is the maximization problem of the monitor? The answer is in the format max((Termi) + (-1/2 am) + (Term3)) Choose the third term (Term3): a. ms(1-e) b. s1/2 ce? C. ms(e) d. -ms(e) e. -1/2 ce? f. 1/2 ce? g. -ms(1-e) h. -51/ ce
