Both a defendant and plaintiff believe there is an 80 percent chance that the plaintiff will win $500,000 and a 20 percent chance that the plaintiff will lose and be awarded nothing (zero). If the plaintiff's litigation cost is $150,000 and the defendant's litigation cost is $200,000, the plaintiff would be willing to accept any amount greater than _______to settle.

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The plaintiff expects to win $500,000 with an 80% probability, which gives an expected value of $400,000. After subtracting litigation costs of $150,000, the plaintiff's net expected value is $250,000. Therefore, the plaintiff would be willing to accept any settlement amount greater than $250,000.

Both a Defendant and Plaintiff Believe There Is an 80