Question: Use a decision tree to illustrate how a risk- neutral plaintiff in a lawsuit decides whether to settle a claim or go to trial. The

Use a decision tree to illustrate how a risk- neutral plaintiff in a lawsuit decides whether to settle a claim or go to trial. The defendants offer $ 50,000 to settle now. If the plaintiff does not settle, the plaintiff believes that the probability of winning at trial is 60%. If the plaintiff wins, the amount awarded is X. How large can X be before the plaintiff refuses to settle? How does the plaintiff’s attitude toward risk affect this decision?

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The plaintiff must believe that X is at least 83333 5000006 ... View full answer

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