(Solution) - Trial procedures are formal and involve a lot of people -(2025 Original AI-Free Solution)

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Trial procedures are formal and involve a lot of people, whereas discovery procedures are relatively informal and involve relatively few people. Consequently, discovering a fact before trial is cheaper than finding it during trial. Most trials, however, are averted through an out-of-court settlement. As a result, if the parties postpone finding a fact until trial, they may avoid the cost completely. To appreciate this trade-off between cost and certainty, consider a numerical problem. Let x denote the ratio of the cost of finding a fact during the trial and the cost of discovering the fact before trial. Assume that the probability of a settlement out of court equals .9. How large must x be in order for the expected cost of finding the fact at trial to exceed the cost of discovering it before trial?