Is there a rule of thumb for determining the amount one should accept for a settlement offer? The Next CEO of Stack OverflowCan one apply to be a Hooters Girl for a free settlement?Can one turn down a settlement offer if it's for more than the amount being claimed?Could I apply for a job at Hooters with the intent of suing for a settlement when they don't hire me?
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Is there a rule of thumb for determining the amount one should accept for a settlement offer?
The Next CEO of Stack OverflowCan one apply to be a Hooters Girl for a free settlement?Can one turn down a settlement offer if it's for more than the amount being claimed?Could I apply for a job at Hooters with the intent of suing for a settlement when they don't hire me?
For this question let's use the amount of $200,000 owed to the plaintiff by the defendant in a breach of contract dispute. Is there a rule of thumb for calculating how much you should accept in a settlement?
Some factors:
The monies owed are for specific damages based on transactions and do not include anything arbitrary such as emotional damages, etc.
50% of the $200K is based on a verbal agreement and past practice
If I had to estimate the odds for a trial, I would put them at 70/30 for the plaintiff
breach-of-contract settlement unjust-enrichment
add a comment |
For this question let's use the amount of $200,000 owed to the plaintiff by the defendant in a breach of contract dispute. Is there a rule of thumb for calculating how much you should accept in a settlement?
Some factors:
The monies owed are for specific damages based on transactions and do not include anything arbitrary such as emotional damages, etc.
50% of the $200K is based on a verbal agreement and past practice
If I had to estimate the odds for a trial, I would put them at 70/30 for the plaintiff
breach-of-contract settlement unjust-enrichment
3
While this question might require some opinion, it is not "primarily opinion based".
– A. K.
8 hours ago
add a comment |
For this question let's use the amount of $200,000 owed to the plaintiff by the defendant in a breach of contract dispute. Is there a rule of thumb for calculating how much you should accept in a settlement?
Some factors:
The monies owed are for specific damages based on transactions and do not include anything arbitrary such as emotional damages, etc.
50% of the $200K is based on a verbal agreement and past practice
If I had to estimate the odds for a trial, I would put them at 70/30 for the plaintiff
breach-of-contract settlement unjust-enrichment
For this question let's use the amount of $200,000 owed to the plaintiff by the defendant in a breach of contract dispute. Is there a rule of thumb for calculating how much you should accept in a settlement?
Some factors:
The monies owed are for specific damages based on transactions and do not include anything arbitrary such as emotional damages, etc.
50% of the $200K is based on a verbal agreement and past practice
If I had to estimate the odds for a trial, I would put them at 70/30 for the plaintiff
breach-of-contract settlement unjust-enrichment
breach-of-contract settlement unjust-enrichment
edited 22 mins ago
Sizzle
asked 9 hours ago
SizzleSizzle
265111
265111
3
While this question might require some opinion, it is not "primarily opinion based".
– A. K.
8 hours ago
add a comment |
3
While this question might require some opinion, it is not "primarily opinion based".
– A. K.
8 hours ago
3
3
While this question might require some opinion, it is not "primarily opinion based".
– A. K.
8 hours ago
While this question might require some opinion, it is not "primarily opinion based".
– A. K.
8 hours ago
add a comment |
4 Answers
4
active
oldest
votes
Legal question, statistical answer.
You need to evaluate the expected value of an outcome which is the sum of the product of probability of winning and the gain (or loss) from winning and the product of the probability of losing and the gain (or loss) from losing.
As a mathmatecal expression: Expected value = [P(winning) x gain] + [P(losing) x loss]
For your example, for the plantif it would be: Expected value = 70% * $200,000 + 30% * $0 = $140,000
Take the expected value and compare that to your settlement for the plaintiff anything settlement offer above $140,000 to a rational plaintiff (can't emphasize rational enough) is a good deal and they should accept. Any offer below $140,000 would be a good deal for a rational defendant. Going to trial is what happens when the parties are either irrational or estimate different and more favorable odds.
Now this doesn't account for lawyers' fees incurred which will depend on whether you are on contingency or not but this can change your outcomes. Because of these fees, many insurance companies tend to just pay out for minor claims since the cost of winning in court even if it is certain is a higher cost than the claim.
Thanks for the response. There is no insurance company I am aware of, that is involved. I will run this calculation on various winning %s. I think it may be higher than 70% but that seemed like a fair and reasonable assumption.
– Sizzle
6 hours ago
7
Note, of course, that the expected value of a trial may include more than just the expected awards; deterrence, NDAs, and publicity are all considerations outside the award amount that might be considered by a rational actor.
– chrylis
6 hours ago
5
The reason why I would not (and, in my answer, did not) resort to the concept of expected value is that I would not want @Sizzle to be falsely confident that his probability numbers reflect his situation or the reality of litigation & settlements.Insurance companies consider the expected value (and not in isolation, but coupled with other statistics) because they have access to large data samples and actuarial expertise. I presume the OP has neither, so he is better off by focusing on other considerations to decide a one-time issue that is hardly amenable (if at all) to statistical analyses.
– Iñaki Viggers
5 hours ago
3
Also consider the utility of the money, which becomes particularly relevant for large sums. A rational machine won't care between a 50%-50% chance at $10M or $0, and a 100% chance of getting $5M. But $5M is already a life-changing amount, and $10M probably won't change your life twice as much, so many people would prefer the sure thing. Personal appetite for risk also plays a role here, as many people would take a sure thing of lower value than the expected value of a gamble. This isn't a casino where odds average out over the long term, so you can't count on expected value in the long run.
– Nuclear Wang
4 hours ago
1
Unless I'm mistaken, there may also be court costs, as well, to factor in.
– jpmc26
3 hours ago
|
show 1 more comment
Is there a rule of thumb for determining the amount one should accept for of a settlement offer?
No. It is entirely up to the injured party to decide how much he is willing to irreversibly give away in a settlement. The party should crunch numbers to ascertain the actual amount he would receive after expenses (first and foremost, attorney fees, if he is represented by one).
The legal fees are such that a lump sum has been paid and the lawyer gets 30% of money recovered over a certain amount. Thanks for the input.
– Sizzle
6 hours ago
add a comment |
A problem is that statistical "expectation" answers (percentage chance x value) are not a value one may expect to receive. They are a value which on average may be expected if there were repeated events.
For a lawyer, with many clients and cases, an accurate expectation will suggest how they can maximise their overall case wins.
But its a lot less clear how valid that is for a single client with a single case. An analogy might be - roll a die. If the number is 3 - 6 you double your money, 1 or 2 you lose it all. Now, the expectation is that for every pound/dollar you bet, you'll receive a gain of 33% (bet 6 times => lose 2 units, win back 8 units => long term expected gain is 8/6 x your bet value). Now, I as your friend suggest that as you have an expectation of profit, you should borrow heavily and bet your shirt and all you can on a single roll of the dice, and enjoy the outcome! You probably don't want to. Whereas if I suggested betting many times for £100 each, you'd probably like it, because the expectation (long term) will have a very good chance to play off.
With a single case having a 70% chance of a win and 30% chance of a lose, the risk isn't of a gradual gain/gradual loss. You get a single event only, which is that you roll the dice once, and a significant chance of both major gain and major loss. Expectations and trends and averages just aren't a good way to decide it. It can guide, but it shouldn't decide.
A better frame of mind is this. Here are 3 medical situations (not great analogies, but a high-impact single event choice we are all familiar with):
- Suppose you had to consider whether or not to have surgery to fix a disability (representing the damage you're currently living with in the legal situation). The surgery is guaranteed to be quick and pain-free, so the only question is the likely outcome. You have a 60% chance of complete success but 40% chance of making it worse.
- As above, but this time there's an 85% chance of success - but also a 15% chance of death.
- Finally, suppose you had usually-fatal-in-18-months cancer. Chemotherapy would be painful and cost all you have, but gives you a 20% chance of complete cure, a 20% chance of 2 more years of life, and a 60% chance of completely wasting your money and being painful as well.
Can you see from these 3 examples, how in single event cases, many people might reject an 85% success option, or accept a painful and costly 20-40% chance. Different people with different views will often differ on what they'd do. They probably would not just do a "statistical working" to decide between the options, though.
To;Dr - expected gain/loss is a helpful hint, but a bad decider.
In a single case, you need to engage your intuition about the other party, and your own needs and attitudes.
You ask for a rule of thumb, but for a single case, the best rule of thumb is to ask, "what do you think is likely to happen, what are the risks and impact if it works/fails, and what are your attitudes to those".
add a comment |
Yes, you guys are correct that there isn't one standard number, but in general you should look at the amounts given in similar cases.
I know that isn't as long and drawn out as most answers on here, but truthfully you normally look at awards in past cases.
New contributor
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4 Answers
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active
oldest
votes
4 Answers
4
active
oldest
votes
active
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active
oldest
votes
Legal question, statistical answer.
You need to evaluate the expected value of an outcome which is the sum of the product of probability of winning and the gain (or loss) from winning and the product of the probability of losing and the gain (or loss) from losing.
As a mathmatecal expression: Expected value = [P(winning) x gain] + [P(losing) x loss]
For your example, for the plantif it would be: Expected value = 70% * $200,000 + 30% * $0 = $140,000
Take the expected value and compare that to your settlement for the plaintiff anything settlement offer above $140,000 to a rational plaintiff (can't emphasize rational enough) is a good deal and they should accept. Any offer below $140,000 would be a good deal for a rational defendant. Going to trial is what happens when the parties are either irrational or estimate different and more favorable odds.
Now this doesn't account for lawyers' fees incurred which will depend on whether you are on contingency or not but this can change your outcomes. Because of these fees, many insurance companies tend to just pay out for minor claims since the cost of winning in court even if it is certain is a higher cost than the claim.
Thanks for the response. There is no insurance company I am aware of, that is involved. I will run this calculation on various winning %s. I think it may be higher than 70% but that seemed like a fair and reasonable assumption.
– Sizzle
6 hours ago
7
Note, of course, that the expected value of a trial may include more than just the expected awards; deterrence, NDAs, and publicity are all considerations outside the award amount that might be considered by a rational actor.
– chrylis
6 hours ago
5
The reason why I would not (and, in my answer, did not) resort to the concept of expected value is that I would not want @Sizzle to be falsely confident that his probability numbers reflect his situation or the reality of litigation & settlements.Insurance companies consider the expected value (and not in isolation, but coupled with other statistics) because they have access to large data samples and actuarial expertise. I presume the OP has neither, so he is better off by focusing on other considerations to decide a one-time issue that is hardly amenable (if at all) to statistical analyses.
– Iñaki Viggers
5 hours ago
3
Also consider the utility of the money, which becomes particularly relevant for large sums. A rational machine won't care between a 50%-50% chance at $10M or $0, and a 100% chance of getting $5M. But $5M is already a life-changing amount, and $10M probably won't change your life twice as much, so many people would prefer the sure thing. Personal appetite for risk also plays a role here, as many people would take a sure thing of lower value than the expected value of a gamble. This isn't a casino where odds average out over the long term, so you can't count on expected value in the long run.
– Nuclear Wang
4 hours ago
1
Unless I'm mistaken, there may also be court costs, as well, to factor in.
– jpmc26
3 hours ago
|
show 1 more comment
Legal question, statistical answer.
You need to evaluate the expected value of an outcome which is the sum of the product of probability of winning and the gain (or loss) from winning and the product of the probability of losing and the gain (or loss) from losing.
As a mathmatecal expression: Expected value = [P(winning) x gain] + [P(losing) x loss]
For your example, for the plantif it would be: Expected value = 70% * $200,000 + 30% * $0 = $140,000
Take the expected value and compare that to your settlement for the plaintiff anything settlement offer above $140,000 to a rational plaintiff (can't emphasize rational enough) is a good deal and they should accept. Any offer below $140,000 would be a good deal for a rational defendant. Going to trial is what happens when the parties are either irrational or estimate different and more favorable odds.
Now this doesn't account for lawyers' fees incurred which will depend on whether you are on contingency or not but this can change your outcomes. Because of these fees, many insurance companies tend to just pay out for minor claims since the cost of winning in court even if it is certain is a higher cost than the claim.
Thanks for the response. There is no insurance company I am aware of, that is involved. I will run this calculation on various winning %s. I think it may be higher than 70% but that seemed like a fair and reasonable assumption.
– Sizzle
6 hours ago
7
Note, of course, that the expected value of a trial may include more than just the expected awards; deterrence, NDAs, and publicity are all considerations outside the award amount that might be considered by a rational actor.
– chrylis
6 hours ago
5
The reason why I would not (and, in my answer, did not) resort to the concept of expected value is that I would not want @Sizzle to be falsely confident that his probability numbers reflect his situation or the reality of litigation & settlements.Insurance companies consider the expected value (and not in isolation, but coupled with other statistics) because they have access to large data samples and actuarial expertise. I presume the OP has neither, so he is better off by focusing on other considerations to decide a one-time issue that is hardly amenable (if at all) to statistical analyses.
– Iñaki Viggers
5 hours ago
3
Also consider the utility of the money, which becomes particularly relevant for large sums. A rational machine won't care between a 50%-50% chance at $10M or $0, and a 100% chance of getting $5M. But $5M is already a life-changing amount, and $10M probably won't change your life twice as much, so many people would prefer the sure thing. Personal appetite for risk also plays a role here, as many people would take a sure thing of lower value than the expected value of a gamble. This isn't a casino where odds average out over the long term, so you can't count on expected value in the long run.
– Nuclear Wang
4 hours ago
1
Unless I'm mistaken, there may also be court costs, as well, to factor in.
– jpmc26
3 hours ago
|
show 1 more comment
Legal question, statistical answer.
You need to evaluate the expected value of an outcome which is the sum of the product of probability of winning and the gain (or loss) from winning and the product of the probability of losing and the gain (or loss) from losing.
As a mathmatecal expression: Expected value = [P(winning) x gain] + [P(losing) x loss]
For your example, for the plantif it would be: Expected value = 70% * $200,000 + 30% * $0 = $140,000
Take the expected value and compare that to your settlement for the plaintiff anything settlement offer above $140,000 to a rational plaintiff (can't emphasize rational enough) is a good deal and they should accept. Any offer below $140,000 would be a good deal for a rational defendant. Going to trial is what happens when the parties are either irrational or estimate different and more favorable odds.
Now this doesn't account for lawyers' fees incurred which will depend on whether you are on contingency or not but this can change your outcomes. Because of these fees, many insurance companies tend to just pay out for minor claims since the cost of winning in court even if it is certain is a higher cost than the claim.
Legal question, statistical answer.
You need to evaluate the expected value of an outcome which is the sum of the product of probability of winning and the gain (or loss) from winning and the product of the probability of losing and the gain (or loss) from losing.
As a mathmatecal expression: Expected value = [P(winning) x gain] + [P(losing) x loss]
For your example, for the plantif it would be: Expected value = 70% * $200,000 + 30% * $0 = $140,000
Take the expected value and compare that to your settlement for the plaintiff anything settlement offer above $140,000 to a rational plaintiff (can't emphasize rational enough) is a good deal and they should accept. Any offer below $140,000 would be a good deal for a rational defendant. Going to trial is what happens when the parties are either irrational or estimate different and more favorable odds.
Now this doesn't account for lawyers' fees incurred which will depend on whether you are on contingency or not but this can change your outcomes. Because of these fees, many insurance companies tend to just pay out for minor claims since the cost of winning in court even if it is certain is a higher cost than the claim.
answered 8 hours ago
A. K.A. K.
1,5411128
1,5411128
Thanks for the response. There is no insurance company I am aware of, that is involved. I will run this calculation on various winning %s. I think it may be higher than 70% but that seemed like a fair and reasonable assumption.
– Sizzle
6 hours ago
7
Note, of course, that the expected value of a trial may include more than just the expected awards; deterrence, NDAs, and publicity are all considerations outside the award amount that might be considered by a rational actor.
– chrylis
6 hours ago
5
The reason why I would not (and, in my answer, did not) resort to the concept of expected value is that I would not want @Sizzle to be falsely confident that his probability numbers reflect his situation or the reality of litigation & settlements.Insurance companies consider the expected value (and not in isolation, but coupled with other statistics) because they have access to large data samples and actuarial expertise. I presume the OP has neither, so he is better off by focusing on other considerations to decide a one-time issue that is hardly amenable (if at all) to statistical analyses.
– Iñaki Viggers
5 hours ago
3
Also consider the utility of the money, which becomes particularly relevant for large sums. A rational machine won't care between a 50%-50% chance at $10M or $0, and a 100% chance of getting $5M. But $5M is already a life-changing amount, and $10M probably won't change your life twice as much, so many people would prefer the sure thing. Personal appetite for risk also plays a role here, as many people would take a sure thing of lower value than the expected value of a gamble. This isn't a casino where odds average out over the long term, so you can't count on expected value in the long run.
– Nuclear Wang
4 hours ago
1
Unless I'm mistaken, there may also be court costs, as well, to factor in.
– jpmc26
3 hours ago
|
show 1 more comment
Thanks for the response. There is no insurance company I am aware of, that is involved. I will run this calculation on various winning %s. I think it may be higher than 70% but that seemed like a fair and reasonable assumption.
– Sizzle
6 hours ago
7
Note, of course, that the expected value of a trial may include more than just the expected awards; deterrence, NDAs, and publicity are all considerations outside the award amount that might be considered by a rational actor.
– chrylis
6 hours ago
5
The reason why I would not (and, in my answer, did not) resort to the concept of expected value is that I would not want @Sizzle to be falsely confident that his probability numbers reflect his situation or the reality of litigation & settlements.Insurance companies consider the expected value (and not in isolation, but coupled with other statistics) because they have access to large data samples and actuarial expertise. I presume the OP has neither, so he is better off by focusing on other considerations to decide a one-time issue that is hardly amenable (if at all) to statistical analyses.
– Iñaki Viggers
5 hours ago
3
Also consider the utility of the money, which becomes particularly relevant for large sums. A rational machine won't care between a 50%-50% chance at $10M or $0, and a 100% chance of getting $5M. But $5M is already a life-changing amount, and $10M probably won't change your life twice as much, so many people would prefer the sure thing. Personal appetite for risk also plays a role here, as many people would take a sure thing of lower value than the expected value of a gamble. This isn't a casino where odds average out over the long term, so you can't count on expected value in the long run.
– Nuclear Wang
4 hours ago
1
Unless I'm mistaken, there may also be court costs, as well, to factor in.
– jpmc26
3 hours ago
Thanks for the response. There is no insurance company I am aware of, that is involved. I will run this calculation on various winning %s. I think it may be higher than 70% but that seemed like a fair and reasonable assumption.
– Sizzle
6 hours ago
Thanks for the response. There is no insurance company I am aware of, that is involved. I will run this calculation on various winning %s. I think it may be higher than 70% but that seemed like a fair and reasonable assumption.
– Sizzle
6 hours ago
7
7
Note, of course, that the expected value of a trial may include more than just the expected awards; deterrence, NDAs, and publicity are all considerations outside the award amount that might be considered by a rational actor.
– chrylis
6 hours ago
Note, of course, that the expected value of a trial may include more than just the expected awards; deterrence, NDAs, and publicity are all considerations outside the award amount that might be considered by a rational actor.
– chrylis
6 hours ago
5
5
The reason why I would not (and, in my answer, did not) resort to the concept of expected value is that I would not want @Sizzle to be falsely confident that his probability numbers reflect his situation or the reality of litigation & settlements.Insurance companies consider the expected value (and not in isolation, but coupled with other statistics) because they have access to large data samples and actuarial expertise. I presume the OP has neither, so he is better off by focusing on other considerations to decide a one-time issue that is hardly amenable (if at all) to statistical analyses.
– Iñaki Viggers
5 hours ago
The reason why I would not (and, in my answer, did not) resort to the concept of expected value is that I would not want @Sizzle to be falsely confident that his probability numbers reflect his situation or the reality of litigation & settlements.Insurance companies consider the expected value (and not in isolation, but coupled with other statistics) because they have access to large data samples and actuarial expertise. I presume the OP has neither, so he is better off by focusing on other considerations to decide a one-time issue that is hardly amenable (if at all) to statistical analyses.
– Iñaki Viggers
5 hours ago
3
3
Also consider the utility of the money, which becomes particularly relevant for large sums. A rational machine won't care between a 50%-50% chance at $10M or $0, and a 100% chance of getting $5M. But $5M is already a life-changing amount, and $10M probably won't change your life twice as much, so many people would prefer the sure thing. Personal appetite for risk also plays a role here, as many people would take a sure thing of lower value than the expected value of a gamble. This isn't a casino where odds average out over the long term, so you can't count on expected value in the long run.
– Nuclear Wang
4 hours ago
Also consider the utility of the money, which becomes particularly relevant for large sums. A rational machine won't care between a 50%-50% chance at $10M or $0, and a 100% chance of getting $5M. But $5M is already a life-changing amount, and $10M probably won't change your life twice as much, so many people would prefer the sure thing. Personal appetite for risk also plays a role here, as many people would take a sure thing of lower value than the expected value of a gamble. This isn't a casino where odds average out over the long term, so you can't count on expected value in the long run.
– Nuclear Wang
4 hours ago
1
1
Unless I'm mistaken, there may also be court costs, as well, to factor in.
– jpmc26
3 hours ago
Unless I'm mistaken, there may also be court costs, as well, to factor in.
– jpmc26
3 hours ago
|
show 1 more comment
Is there a rule of thumb for determining the amount one should accept for of a settlement offer?
No. It is entirely up to the injured party to decide how much he is willing to irreversibly give away in a settlement. The party should crunch numbers to ascertain the actual amount he would receive after expenses (first and foremost, attorney fees, if he is represented by one).
The legal fees are such that a lump sum has been paid and the lawyer gets 30% of money recovered over a certain amount. Thanks for the input.
– Sizzle
6 hours ago
add a comment |
Is there a rule of thumb for determining the amount one should accept for of a settlement offer?
No. It is entirely up to the injured party to decide how much he is willing to irreversibly give away in a settlement. The party should crunch numbers to ascertain the actual amount he would receive after expenses (first and foremost, attorney fees, if he is represented by one).
The legal fees are such that a lump sum has been paid and the lawyer gets 30% of money recovered over a certain amount. Thanks for the input.
– Sizzle
6 hours ago
add a comment |
Is there a rule of thumb for determining the amount one should accept for of a settlement offer?
No. It is entirely up to the injured party to decide how much he is willing to irreversibly give away in a settlement. The party should crunch numbers to ascertain the actual amount he would receive after expenses (first and foremost, attorney fees, if he is represented by one).
Is there a rule of thumb for determining the amount one should accept for of a settlement offer?
No. It is entirely up to the injured party to decide how much he is willing to irreversibly give away in a settlement. The party should crunch numbers to ascertain the actual amount he would receive after expenses (first and foremost, attorney fees, if he is represented by one).
answered 8 hours ago
Iñaki ViggersIñaki Viggers
10.4k21530
10.4k21530
The legal fees are such that a lump sum has been paid and the lawyer gets 30% of money recovered over a certain amount. Thanks for the input.
– Sizzle
6 hours ago
add a comment |
The legal fees are such that a lump sum has been paid and the lawyer gets 30% of money recovered over a certain amount. Thanks for the input.
– Sizzle
6 hours ago
The legal fees are such that a lump sum has been paid and the lawyer gets 30% of money recovered over a certain amount. Thanks for the input.
– Sizzle
6 hours ago
The legal fees are such that a lump sum has been paid and the lawyer gets 30% of money recovered over a certain amount. Thanks for the input.
– Sizzle
6 hours ago
add a comment |
A problem is that statistical "expectation" answers (percentage chance x value) are not a value one may expect to receive. They are a value which on average may be expected if there were repeated events.
For a lawyer, with many clients and cases, an accurate expectation will suggest how they can maximise their overall case wins.
But its a lot less clear how valid that is for a single client with a single case. An analogy might be - roll a die. If the number is 3 - 6 you double your money, 1 or 2 you lose it all. Now, the expectation is that for every pound/dollar you bet, you'll receive a gain of 33% (bet 6 times => lose 2 units, win back 8 units => long term expected gain is 8/6 x your bet value). Now, I as your friend suggest that as you have an expectation of profit, you should borrow heavily and bet your shirt and all you can on a single roll of the dice, and enjoy the outcome! You probably don't want to. Whereas if I suggested betting many times for £100 each, you'd probably like it, because the expectation (long term) will have a very good chance to play off.
With a single case having a 70% chance of a win and 30% chance of a lose, the risk isn't of a gradual gain/gradual loss. You get a single event only, which is that you roll the dice once, and a significant chance of both major gain and major loss. Expectations and trends and averages just aren't a good way to decide it. It can guide, but it shouldn't decide.
A better frame of mind is this. Here are 3 medical situations (not great analogies, but a high-impact single event choice we are all familiar with):
- Suppose you had to consider whether or not to have surgery to fix a disability (representing the damage you're currently living with in the legal situation). The surgery is guaranteed to be quick and pain-free, so the only question is the likely outcome. You have a 60% chance of complete success but 40% chance of making it worse.
- As above, but this time there's an 85% chance of success - but also a 15% chance of death.
- Finally, suppose you had usually-fatal-in-18-months cancer. Chemotherapy would be painful and cost all you have, but gives you a 20% chance of complete cure, a 20% chance of 2 more years of life, and a 60% chance of completely wasting your money and being painful as well.
Can you see from these 3 examples, how in single event cases, many people might reject an 85% success option, or accept a painful and costly 20-40% chance. Different people with different views will often differ on what they'd do. They probably would not just do a "statistical working" to decide between the options, though.
To;Dr - expected gain/loss is a helpful hint, but a bad decider.
In a single case, you need to engage your intuition about the other party, and your own needs and attitudes.
You ask for a rule of thumb, but for a single case, the best rule of thumb is to ask, "what do you think is likely to happen, what are the risks and impact if it works/fails, and what are your attitudes to those".
add a comment |
A problem is that statistical "expectation" answers (percentage chance x value) are not a value one may expect to receive. They are a value which on average may be expected if there were repeated events.
For a lawyer, with many clients and cases, an accurate expectation will suggest how they can maximise their overall case wins.
But its a lot less clear how valid that is for a single client with a single case. An analogy might be - roll a die. If the number is 3 - 6 you double your money, 1 or 2 you lose it all. Now, the expectation is that for every pound/dollar you bet, you'll receive a gain of 33% (bet 6 times => lose 2 units, win back 8 units => long term expected gain is 8/6 x your bet value). Now, I as your friend suggest that as you have an expectation of profit, you should borrow heavily and bet your shirt and all you can on a single roll of the dice, and enjoy the outcome! You probably don't want to. Whereas if I suggested betting many times for £100 each, you'd probably like it, because the expectation (long term) will have a very good chance to play off.
With a single case having a 70% chance of a win and 30% chance of a lose, the risk isn't of a gradual gain/gradual loss. You get a single event only, which is that you roll the dice once, and a significant chance of both major gain and major loss. Expectations and trends and averages just aren't a good way to decide it. It can guide, but it shouldn't decide.
A better frame of mind is this. Here are 3 medical situations (not great analogies, but a high-impact single event choice we are all familiar with):
- Suppose you had to consider whether or not to have surgery to fix a disability (representing the damage you're currently living with in the legal situation). The surgery is guaranteed to be quick and pain-free, so the only question is the likely outcome. You have a 60% chance of complete success but 40% chance of making it worse.
- As above, but this time there's an 85% chance of success - but also a 15% chance of death.
- Finally, suppose you had usually-fatal-in-18-months cancer. Chemotherapy would be painful and cost all you have, but gives you a 20% chance of complete cure, a 20% chance of 2 more years of life, and a 60% chance of completely wasting your money and being painful as well.
Can you see from these 3 examples, how in single event cases, many people might reject an 85% success option, or accept a painful and costly 20-40% chance. Different people with different views will often differ on what they'd do. They probably would not just do a "statistical working" to decide between the options, though.
To;Dr - expected gain/loss is a helpful hint, but a bad decider.
In a single case, you need to engage your intuition about the other party, and your own needs and attitudes.
You ask for a rule of thumb, but for a single case, the best rule of thumb is to ask, "what do you think is likely to happen, what are the risks and impact if it works/fails, and what are your attitudes to those".
add a comment |
A problem is that statistical "expectation" answers (percentage chance x value) are not a value one may expect to receive. They are a value which on average may be expected if there were repeated events.
For a lawyer, with many clients and cases, an accurate expectation will suggest how they can maximise their overall case wins.
But its a lot less clear how valid that is for a single client with a single case. An analogy might be - roll a die. If the number is 3 - 6 you double your money, 1 or 2 you lose it all. Now, the expectation is that for every pound/dollar you bet, you'll receive a gain of 33% (bet 6 times => lose 2 units, win back 8 units => long term expected gain is 8/6 x your bet value). Now, I as your friend suggest that as you have an expectation of profit, you should borrow heavily and bet your shirt and all you can on a single roll of the dice, and enjoy the outcome! You probably don't want to. Whereas if I suggested betting many times for £100 each, you'd probably like it, because the expectation (long term) will have a very good chance to play off.
With a single case having a 70% chance of a win and 30% chance of a lose, the risk isn't of a gradual gain/gradual loss. You get a single event only, which is that you roll the dice once, and a significant chance of both major gain and major loss. Expectations and trends and averages just aren't a good way to decide it. It can guide, but it shouldn't decide.
A better frame of mind is this. Here are 3 medical situations (not great analogies, but a high-impact single event choice we are all familiar with):
- Suppose you had to consider whether or not to have surgery to fix a disability (representing the damage you're currently living with in the legal situation). The surgery is guaranteed to be quick and pain-free, so the only question is the likely outcome. You have a 60% chance of complete success but 40% chance of making it worse.
- As above, but this time there's an 85% chance of success - but also a 15% chance of death.
- Finally, suppose you had usually-fatal-in-18-months cancer. Chemotherapy would be painful and cost all you have, but gives you a 20% chance of complete cure, a 20% chance of 2 more years of life, and a 60% chance of completely wasting your money and being painful as well.
Can you see from these 3 examples, how in single event cases, many people might reject an 85% success option, or accept a painful and costly 20-40% chance. Different people with different views will often differ on what they'd do. They probably would not just do a "statistical working" to decide between the options, though.
To;Dr - expected gain/loss is a helpful hint, but a bad decider.
In a single case, you need to engage your intuition about the other party, and your own needs and attitudes.
You ask for a rule of thumb, but for a single case, the best rule of thumb is to ask, "what do you think is likely to happen, what are the risks and impact if it works/fails, and what are your attitudes to those".
A problem is that statistical "expectation" answers (percentage chance x value) are not a value one may expect to receive. They are a value which on average may be expected if there were repeated events.
For a lawyer, with many clients and cases, an accurate expectation will suggest how they can maximise their overall case wins.
But its a lot less clear how valid that is for a single client with a single case. An analogy might be - roll a die. If the number is 3 - 6 you double your money, 1 or 2 you lose it all. Now, the expectation is that for every pound/dollar you bet, you'll receive a gain of 33% (bet 6 times => lose 2 units, win back 8 units => long term expected gain is 8/6 x your bet value). Now, I as your friend suggest that as you have an expectation of profit, you should borrow heavily and bet your shirt and all you can on a single roll of the dice, and enjoy the outcome! You probably don't want to. Whereas if I suggested betting many times for £100 each, you'd probably like it, because the expectation (long term) will have a very good chance to play off.
With a single case having a 70% chance of a win and 30% chance of a lose, the risk isn't of a gradual gain/gradual loss. You get a single event only, which is that you roll the dice once, and a significant chance of both major gain and major loss. Expectations and trends and averages just aren't a good way to decide it. It can guide, but it shouldn't decide.
A better frame of mind is this. Here are 3 medical situations (not great analogies, but a high-impact single event choice we are all familiar with):
- Suppose you had to consider whether or not to have surgery to fix a disability (representing the damage you're currently living with in the legal situation). The surgery is guaranteed to be quick and pain-free, so the only question is the likely outcome. You have a 60% chance of complete success but 40% chance of making it worse.
- As above, but this time there's an 85% chance of success - but also a 15% chance of death.
- Finally, suppose you had usually-fatal-in-18-months cancer. Chemotherapy would be painful and cost all you have, but gives you a 20% chance of complete cure, a 20% chance of 2 more years of life, and a 60% chance of completely wasting your money and being painful as well.
Can you see from these 3 examples, how in single event cases, many people might reject an 85% success option, or accept a painful and costly 20-40% chance. Different people with different views will often differ on what they'd do. They probably would not just do a "statistical working" to decide between the options, though.
To;Dr - expected gain/loss is a helpful hint, but a bad decider.
In a single case, you need to engage your intuition about the other party, and your own needs and attitudes.
You ask for a rule of thumb, but for a single case, the best rule of thumb is to ask, "what do you think is likely to happen, what are the risks and impact if it works/fails, and what are your attitudes to those".
edited 4 hours ago
answered 4 hours ago
StilezStilez
943211
943211
add a comment |
add a comment |
Yes, you guys are correct that there isn't one standard number, but in general you should look at the amounts given in similar cases.
I know that isn't as long and drawn out as most answers on here, but truthfully you normally look at awards in past cases.
New contributor
add a comment |
Yes, you guys are correct that there isn't one standard number, but in general you should look at the amounts given in similar cases.
I know that isn't as long and drawn out as most answers on here, but truthfully you normally look at awards in past cases.
New contributor
add a comment |
Yes, you guys are correct that there isn't one standard number, but in general you should look at the amounts given in similar cases.
I know that isn't as long and drawn out as most answers on here, but truthfully you normally look at awards in past cases.
New contributor
Yes, you guys are correct that there isn't one standard number, but in general you should look at the amounts given in similar cases.
I know that isn't as long and drawn out as most answers on here, but truthfully you normally look at awards in past cases.
New contributor
New contributor
answered 8 hours ago
PutviPutvi
1303
1303
New contributor
New contributor
add a comment |
add a comment |
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While this question might require some opinion, it is not "primarily opinion based".
– A. K.
8 hours ago