Suppose the plaintiff, Patty, sues the defendant, David, for monetary damages in tort. Patty and David agree that if Patty takes her case to trial and wins, she will receive a judgment in the amount of $100,000. However, in order to take the case to trial, Patty will incur litigation costs in the amount of $20,000. And if the case is taken to trial, David will incur litigation costs in the amount of $20,000 as well. Patty and David, however, disagree with respect to the probability that Patty will win at trial. Patty thinks she has a 90% chance of winning at trial, while David thinks she will only win with a probability of 60%.

1. Under the differing perceptions (dual optimism) model, which of the following is true concerning the possibility of settlement under the American rule?

a. The parties will settle, and party will receive a settlement amount betwwen $60,000 to $90,000

b. The parties will settle, and party will receive a settlement amount betwwen $70,000 to $80,000

c. The parties will settle, and party will receive a settlement amount betwwen $84,000 to $86,000

d. The parties will not settle, and the case will proceed to trial

2. Under the differing perceptions (dual optimism) model, which of the following is true concerning the possibility of settlement under the English rule?

a. The parties will settle, and party will receive a settlement amount betwwen $60,000 to $90,000

b. The parties will settle, and party will receive a settlement amount betwwen $70,000 to $80,000

c. The parties will settle, and party will receive a settlement amount betwwen $84,000 to $86,000

d. The parties will not settle, and the case will proceed to trial