A defendant believes there is a 50 percent chance that the plaintiff will win $1,000,000 and a 50 percent chance that the plaintiff will lose and be awarded nothing (zero). The plaintiff believes that there is a 40 percent chance that they will win $1,000,000 and a 60 percent chance that they will be awarded nothing (zero). The plaintiff's litigation cost is $200,000 and the defendant's litigation cost is $300,000. The defendant would be willing to pay any amount up to to settle and the plaintiff would be willing to accept any amount greater than _______to settle.

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The plaintiff's expected value is 0.4 * $1,000,000 - 0.6 * $200,000 = $200,000. The defendant's expected value is 0.5 * $1,000,000 - 0.5 * $300,000 = $350,000. The plaintiff would be willing to accept any amount greater than $200,000 to settle, and the defendant would be willing to pay any amount up to $350,000 to settle. Therefore, the settlement range is between $200,000 and $350,000.

A Defendant Believes There Is a 50 Percent Chance That