Victors Dilemma Essay Example | Topics and Well Written Essays - 500 words

Victors Dilemma - Essay Example Taking into account the risks involved in the first two options, the probability of earning money by choosing any of the two changes. In the Figure 1, the three options are substantially evaluated in terms of the probability of each and the payouts each option entails. If Victor chooses to sue the motorist, there is an equal chance of him to win or to lose. However, this option will cost him a flat fee of $500. Losing the case will cost him nothing but the $500 fee for suing. The option of threatening to sue automatically costs Victor $100 for the letter. Further decisions will depend on the motorist's reaction. If the motorist offers a settlement offer of $1000, this means that there is a higher chance of him winning the case if he chooses to sue. This is represented by a 60/40 probability in the figure. If the motorist ignores the letter, it implies that Victor's chance of losing the case if he wishes to pursue the case in the court decreases. He may to ignore the case as well. This leads him to doing the third option which is doing nothing. Doing nothing after threatening to sue costs him $100 for the letter. Y et, if he chooses the third option without sending any letter, it would not cost him anything. It even gives him peace, which is valued as $100. Figure 2 shows the estimated value of each option.