Question
In a product liability case, a company can settle out of court for a loss of $350,000, or go to trial, losing $1,300,000 if found
In a product liability case, a company can settle out of court for a loss of $350,000, or go to trial, losing $1,300,000 if found guilty and nothing if found not guilty. Lawyers for the company estimate the probability of a not-guilty verdict to be 0.8.
What is the expected value of the amount the company can lose by taking the case to court?
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Making Hard Decisions with decision tools
Authors: Robert Clemen, Terence Reilly
3rd edition
538797576, 978-0538797573
