A medical doctor is involved in a $1 million malpractice suit. He can either settle out of court for $250,000 or go to court. If he goes to court and loses, he must pay $825,000 plus $175,000 in court costs. If he wins in court the plaintiffs pay the court costs. Identify the actions of this
Decision-making problem.

Question

Quizplus · Accepted Answer

The best choice is to settle out of court for $250,000. This is because if the doctor goes to court and loses, they will have to pay a total of $1 million ($825,000 in damages plus $175,000 in court costs), which is more than the settlement amount. Additionally, if the doctor goes to court and wins, they will not have to pay any costs but will still have to endure the time and stress of a trial. Therefore, settling out of court is the most cost-effective and least risky option.

A Medical Doctor Is Involved in a $1 Million Malpractice