3. Suppose that in the punitive damages phase of the next major oil spill case, both sides expect a jury award of $2 billion on appeal, and that if they proceed with the case without settling, the additional fees will be $100 million for the defendant and $50 million for the plaintiffs. 3.1. On a number line similar to those in Figure 15.1, indicate the expected judgment (J). each side's threat point (Tp and Td), and the settlement range. 3.2. What is the bargaining rent? 3.3. What is the most either side should pay for the right to make a credible final offer? 3.4. If the defendant can make a credible (non-sincerity rule) final offer, what should it be? 3.5. If the plaintiff makes a sincerity rule offer, what should it be? These number lines represent possible settlement values, increasing from left to right. Plaintiff is better off SETTLEMENT RANGE Defendant is better going to trial than off going to trial settling here. Both sides prefer settlement in this range to trial. than settling here. Plaintiff's Threat Point Expected Jury Award Defendant's Threat Point Tp=Jp -Fp Ja= JP Ta= Ja+Fa Plaintiff is better off going to SETTLEMENT RANGE Defendant is better off going trial than settling here. to trial than settling here. Tp=Jp-Fp Jd Jp Ta= Ja+Fd