sta 371 project - that the examiner will not testify is...

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Risk profile: 80% chance you will lose $2.5 million litigating. However, the larger values you could potentially receive (with smaller probability) negate the risk involved with going after more money. If you accept the offer, you will receive $4.5 million dollars with certainty (100% probability). Sensitivity analysis: According to the tornado graph, the decision to litigate or accept the offer is most sensitive to the probability that Gillette’s examiner was aware of related work cited in other applications. If the likelihood
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Unformatted text preview: that the examiner will not testify is greater than 40%, then Gillette should litigate. If the probability that the examiner was aware is 22% or higher, then Gillette should litigate. If it is lower than 22%, then Gillette should accept Energizer’s offer. Gillette should only accept Energizer’s offer if it exceeds approximately $5 million. If the cost to litigate is less than $3 million, then Gillette should pursue litigation....
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This note was uploaded on 09/29/2011 for the course STA 371G taught by Professor Damien during the Spring '11 term at University of Texas.

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