Recently 695 residents filed a lawsuit against a nearby slaughterhouse that sprayed wastewater on fields, allegedly tainting wells and causing illness. Suppose that, if the lawsuit continues to trial, both sides expect the residents to receive a jury award of $2 million. The additional legal fees if the case proceeds to trial will be $300,000 for the residents (the plaintiffs) and $400,000 for the slaughterhouse (the defendant). On the number line below, label and specify the dollar amount of the expected jury award (J), each side's threat point (T_p and T_d), and the settlement range. Assume both sides are risk-neutral and seek to maximize their money.
$\longleftrightarrow$ a. What is the bargaining rent in this case? ______
b. If the slaughterhouse can make a credible (non-Sincerity Rule) final offer, what should it be? ______
c. If the residents make a Sincerity Rule offer, what should it be? ______
d. Identify one alternative dispute resolution technique discussed in the textbook that involves a third party who makes a binding decision.

Question

Recently 695 residents filed a lawsuit against a nearby slaughterhouse that sprayed wastewater on fields, allegedly tainting wells and causing illness. Suppose that, if the lawsuit continues to trial, both sides expect the residents to receive a jury award of $2 million. The additional legal fees if the case proceeds to trial will be $300,000 for the residents (the plaintiffs) and $400,000 for the slaughterhouse (the defendant). On the number line below, label and specify the dollar amount of the expected jury award (J), each side's threat point (T_p and T_d), and the settlement range. Assume both sides are risk-neutral and seek to maximize their money.

\longleftrightarrow

a. What is the bargaining rent in this case? ______
b. If the slaughterhouse can make a credible (non-Sincerity Rule) final offer, what should it be? ______
c. If the residents make a Sincerity Rule offer, what should it be? ______
d. Identify one alternative dispute resolution technique discussed in the textbook that involves a third party who makes a binding decision.

Quizplus · Accepted Answer

The Answer of Recently 695 residents filed a lawsuit against a nearby slaughterhouse that sprayed wastewater on fields, allegedly tainting wells and causing illness. Suppose that, if the lawsuit continues to trial, both sides expect the residents to receive a jury award of $2 million. The additional legal fees if the case proceeds to trial will be $300,000 for the residents (the plaintiffs) and $400,000 for the slaughterhouse (the defendant). On the number line below, label and specify the dollar amount of the expected jury award (J), each side's threat point (T_p and T_d), and the settlement range. Assume both sides are risk-neutral and seek to maximize their money. $$\longleftrightarrow$$ a. What is the bargaining rent in this case? ______ b. If the slaughterhouse can make a credible (non-Sincerity Rule) final offer, what should it be? ______ c. If the residents make a Sincerity Rule offer, what should it be? ______ d. Identify one alternative dispute resolution technique discussed in the textbook that involves a third party who makes a binding decision.

Recently 695 Residents Filed a Lawsuit Against a Nearby Slaughterhouse ⟷\longleftrightarrow⟷

Recently 695 Residents Filed a Lawsuit Against a Nearby Slaughterhouse $\longleftrightarrow$