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6. Decision Tree (Assignment package): New Case Study for Texaco versus Pennzoil Texaco offers $3.5B and Pennzoil to decide between: accept $3.5B, counteroffer with $5B,
6. Decision Tree (Assignment package): New Case Study for Texaco versus Pennzoil Texaco offers $3.5B and Pennzoil to decide between: accept $3.5B, counteroffer with $5B, and refuse to go to court. In case of Pennzoil counteroffer with $5B, then o There is 17% probability that Texaco accepts the counteroffer. o There is 50% probability that Texaco refuses the counteroffer to go to court. o There is 33% probability that Texaco counteroffers with $4B. If they go to court, there is o 25% probability that Pennzoil will win a large reward of $10.3B. o 50% probability that Pennzoil will win a medium reward of $2.5B. o 25% probability that Pennzoil will win no reward.
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