Benjamin Franklin once said, “Laws too gentle are seldom obeyed; too severe, seldom executed.” To… 1 answer below »

Benjamin Franklin once said, “Laws too gentle are seldom obeyed; too severe, seldom executed.” To flush out what he had in mind, the game in FIGURE PR8.4 has three players: a lawmaker, a (typical) citizen, and a judge. The lawmaker chooses among a law with a gentle penalty, one with a moderate penalty, and a law with a severe penalty. In response to the law, the citizen decides whether or not to obey it. If she does not obey it, then the judge decides whether to convict and punish the citizen. Using subgame perfect Nash equilibrium, find values for the unspecified payoffs (those with letters, not numbers) that substantiate Franklin’s claim by resulting in a lawmaker’s choosing a law with a moderate penalty.

 

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