Problem
Suppose settlement is costly. Specifically, let Sp and Sd be the costs of settlement for the plaintiff and defendant.
(a) Derive the trial condition.
(b) Suppose the plaintiff and defendant agree on both the probability of plaintiff victory and the expected recovery at trial. What is the trial condition in this case?
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.