In 1976, the parents of a seven-year-old boy sued a New York hospital for $3.5 million. The boy was blinded shortly after he was born two weeks premature. His parents claimed that hospital doctors administered excessive oxygen to the baby and that this caused the blindness. The case went to trial, and just as the jury announced it had reached a verdict, the lawyers for the two sides arrived at an out-of-court settlement of $500,000.
a. If you were the parents, how would you decide whether to accept the settlement or wait for the jury’s decision? What probability assessments would you need to make? Would you have accepted the settlement?
b. Answer the questions in part (a), taking the hospital’s point of view.