Business, 27.02.2020 22:25 Animlolie

Imagine that a zealous prosecutor (P) has accused a defendant (D) of com- mitting a crime. Suppose that the trial involves evidence production by both parties and that by producing evidence, a litigant increases the probability of winning the trial. Specifically, suppose that the probability that the defendant wins is given by eD /(eD + eP), where eD is the expenditure on evidence production by the defendant and eP is the expenditure on evidence produc- tion by the prosecutor. Assume that eD and eP are greater than or equal to 0. The defendant must pay 8 if he is found guilty, whereas he pays 0 if he is found innocent. The prosecutor receives 8 if she wins and 0 if she loses the case.

(a) Represent this game in normal form.
(b) Write the first-order condition and derive the best-response function for each player.
(c) Find the Nash equilibrium of this game. What is the probability that the defendant wins in equilibrium?

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Imagine that a zealous prosecutor (P) has accused a defendant (D) of com- mitting a crime. Suppose t...

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