A government employee can exert effort e in [0, 1] to produce a good. Effort has a cost ce^2/2 and is unobservable. The probability that the good is produced is e, and each citizen gets utility u(n) for an arbitrary, given n if the good is produced, but 0 otherwise. One citizen is a monitor who can pay a cost αm^2/2 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. What happens to the equilibrium efforts of the government employee if the arbitrary n decreases? Options are 1. equilibrium efforts decrease because the equilibrium e is decreasing in u. 2. equilibrium efforts decrease because the equilibrium e is decreasing in p. 3. equilibrium efforts decrease because the equilibrium e is increasing in p.