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This game involves two players, a criminal (C) and the government (G). The government selects a level of law enforcement, which is a number x
This game involves two players, a criminal (C) and the government (G). The government selects a level of law enforcement, which is a number x [0,). The criminal selects a level of crime y [0,). These choices are made simultaneously and independently. The governments payoff is given by uG(x, y) = xc4 y 2/x, where number c is a positive constant. The criminals payoff is given by uC(x, y) = y 1 + xy . i. Determine the best-response functions of each player. ii. Derive the pure Nash equilibrium of this game.
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