(Solution Document) In a product liability case a company can settle out of court for a loss of $350


In a product liability case a company can settle out of court for a loss of $350,000 or go to trial losing $1,450,000 if found guilty and nothing if found not guilty. lawyers for the company estimate the probability of a non guilty verdict to be 0.8. what is the expected value of the amount the company can lose by taking this case to court.?

Should the company settle out of court? yes or no.?

 







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