Suppose that there is a civil case against a defendant. The probability of the plaintiff winning is fixed at p=0. 5. The damages ar e given by V(Cp ,Cd)=6+6 ln(Cp +1)−6 ln(Cd +1). Find the optimal legal expenditur es under an English-style legal fee system. For what amount would the defendant agree to settle?
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Suppose that there is a civil case against a defendant. The probability of the plaintiff winning is fixed at p=0. 5. The damages ar e given by V(Cp ,Cd)=6+6 ln(Cp +1)−6 ln(Cd +1). Find the optimal legal expenditur es under an English-style legal fee system. For what amount would the defendant agree to settle?
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