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Mathematics, 09.10.2021 06:10 leapfroggiez

Consider the following scenario: In a product liability case, a company can settle out-of-court for a loss of $400,000. If they go to
trial, they will lose $1,250,000 if found liable (guilty) and nothing if found not guilty. Lawyers for the
company Festimate the probability of a not-guilty verdict at 0.8.
What is the expected value for this secnario?

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