You filed a whistleblower complaint with the IRS. The IRS estimates that there is an 80% chance that it will be able to recover $3 million from the wrongdoer. The IRS also estimates that it will have to spend $500,000 in out-of-pocket attorney time fighting this wealthy, belligerent wrongdoer in court. In private conversations, the IRS and the taxpayer's representative have discussed a settlement of this matter for $1.9 million.
a. Would it be rational for the IRS to agree to this settlement?
b. Is it in your self-interest for the IRS to enter into this settlement?