In a court case, a plaintiff claimed that the defendant should pay her$3 million for damages. She
Question:
a. Assuming that the plaintiff is thinking about the award in terms of gains, explain why you might expect her to be risk-averse in this situation. If she is risk-averse, what kind of settlement offer might she accept from the defendant?
b. Assuming that the defendant is thinking about the situation in terms of losses, explain why you might expect him or her to be risk-seeking. What would this imply about settlement offers to which the defendant might agree?
c. Discuss your answers to parts a and b. What are the implications for settlements in real-world court cases? What would happen if the defendant’s expected value were less than the plaintiff’s?
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
Related Book For
Making Hard Decisions with decision tools
ISBN: 978-0538797573
3rd edition
Authors: Robert Clemen, Terence Reilly
Question Posted: