You are considering going to court to sue your employer for an injury at work. You...

 

Transcribed Image Text:

You are considering going to court to sue your employer for an injury at work. You are asking for $500K. Your lawyers suggest that there is about a 50% chance that you will be awarded this amount. There is a 30% you will be awarded only medical costs of $100K. But there is also a 5% chance that you will lose and be $50K out of pocket for your own legal costs. Finally, there is a 15% chance that you will completely lose and have to pay your employer's legal costs of $150K on top of your own costs. Set this up as a (very simple) decision tree and give the best decision. You are considering going to court to sue your employer for an injury at work. You are asking for $500K. Your lawyers suggest that there is about a 50% chance that you will be awarded this amount. There is a 30% you will be awarded only medical costs of $100K. But there is also a 5% chance that you will lose and be $50K out of pocket for your own legal costs. Finally, there is a 15% chance that you will completely lose and have to pay your employer's legal costs of $150K on top of your own costs. Set this up as a (very simple) decision tree and give the best decision.

Answer rating: 100% (QA)

As an employer you are responsible first and foremost for attempting to avoid workplace injuries by providing your employees with a safe place to work ... View the full answer