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Decision Making

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The Technically Techno company has several patents for a variety of different Flash memory devices that are used in computers, cell phones, and a variety of other things. A competitor has recently introduced a product based on technology very similar to something patented by Technically Techno last year. Consequently, Technically Techno has sued the other company for copyright infringement. Based on the facts in the case as well as the record of lawyers involved, Technically Techno believes that there is a 40% chance that it will be awarded $300,000 if lawsuit goes to the court. There is 30% chance that they will be awarded only $50,000 if they go to the court and win, and there is 30% chance they would lose the case and be awarded nothing. The estimated fees if they go to court is $50,000. However, the other company has offered to pay Technically Techno $75000 to settle the dispute without going to court. The estimated legal cost of this would only be $10,000. If Technically Techno wishes to maximize the expected gain, should they accept the settlement offer?

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Solution analyzes the various options available in the given case.

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Solution:
Case 1 : They go for court

Nature of state Probability Gain Expected Gain
Pi Xi ...

Solution provided by:
Lokesh Jain, MSc
Education
  • BEng (Hons) , Birla Institute of Technology and Science, India
  • MSc (Hons) , Birla Institute of Technology and Science, India
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