The Jailer hears from his friends that Palamon has made sure that the Jailer will not be blamed for his escape. Palamon has also contributed a dowry to the Jailer's Daughter for her marriage. The Daughter's Wooer brings news of her madness, which her father already suspected: "Either this was her love to Palamon, / Or fear of my miscarrying on his scape, / Or both" (IV.i.49-51). The Wooer describes his overhearing her singing, and she seems deranged along rather characteristic Shakespearean lines: warbling "Willow, willow, willow" (IV.i.80) and such. She would have gone out like Ophelia -- "She saw me, and straight sought the flood" (IV.i.95) -- but the Wooer yanked her out of the water. The Jailer's Brother brings the Daughter in, and she rants insanely for a page or two.
Emilia has decided, "I'll choose, / And end their strife" (IV.ii.2-3). She has pictures of the two kinsmen and cannot decide which is more attractive. "I am a fool, my reason is lost in me; / I have no choice, and I have lied so lewdly, / That women ought to beat me" (IV.ii.34-36). A Gentleman announces the arrival of the knights, and Emilia complains to Diana that she'll be blamed for the "blood of princes" (IV.ii.60). Theseus and the others enter, and a Messenger tediously describes the knights who will compete.
A Doctor is consulted about the madness of the Jailer's Daughter, whose latest themes are death and hell. Her reference to Dido (IV.iii.15) is, of course, anachronistic. The Doctor's diagnosis: "'Tis not an engraff'd madness, but a most thick and profound melancholy" (IV.iii.48-50); the "surfeit of her eye" on Palamon has imbalanced her senses (IV.iii.70ff). His learned recommendation is that the Wooer pretend to be Palamon and date her: "It is falsehood she is in, which is with falsehoods to be combated" (IV.iii.93-94). Her inability to tell "the difference between 'Palamon' and Palamon," reflects Emilia's inability to differentiate between the two noble kinsmen (Garber 900).