Punishment in The Sims Medieval includes taxation, the stocks and execution.
If a sim character performs poorly in their daily occupation, they can be put in the stocks where other sims throw tomatos or eggs at them. When playing as the monarch you can send anyone you want to the stocks. If a spy fails at pickpocketing they are brought to the stock for a few hours.
If any sim has committed an offence, he/she will be marked for arrest by the Constable and put on a list; those who are acknowledged for their bad deeds first will be prioritized, meaning that sims may have to wait temporarily until they can be properly punished. A glitch with the Constable's AI might permanently prevent marked sims from being placed in the stocks: (http://thesimsmedieval.wikia.com/wiki/Bugs/Glitches). A -5 "Marked for Arrest" buff is placed upon all sims who are waiting to be punished.
Once placed in the stocks, sims receive a negative -15 buff: "Humiliated by Stocks". They will stay there for a couple of hours before being released by the Constable. The Monarch can also release punished sims before this time. Other sims may throw eggs or tomatoes at others who are in the stocks. Minor offences (stealing or pickpocketing) will result in a trip to the stocks, whilst much more serious crimes will be taken to the pit beast. Even the King/Queen can be punished if a quest requires for certain events to occur that result in punishment.
Sims may be sent to the pit beast if they commit a serious crime, like using poison. The monarch can also be sent to the pit (depending on the quest) and send others of insignificant importance there as well, providing that they aren't needed for any tasks/jobs relevant to the player's current duty; leaders of foreign territories cannot be sent to the pit because of this. If your sim is to face the pit beast, he/she will receive the "Marked for Death" buff (-20 focus). Your sim's level will impact whether or not they survive the pit beast; more experienced heroes will typically live (although this does not apply every time), and lower-leveled ones are more likely to die. If the pit beast is fed before your sims fight with it, they will "make nice". Sims who survive the beast will be deemed innocent, and will receive a +30 focus buff for 23 hours: "Judged Innocent".
Regular kingdom members (the town crier, for instance), will be replaced by a similar individual if they die in the judgment zone.
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