In early 1984, Pennzoil and Getty Oil agreed to the terms of a merger. Before any formal…

 

In early 1984, Pennzoil and Getty Oil agreed to the terms of a merger. Before any formal documents could be signed, however, Texaco offered Getty Oil a substantially better price,

so Gordon Getty, who controlled most of the Getty stock, reneged on the Pennzoil deal and sold to Texaco. Naturally, Pennzoil felt as if it had been dealt with unfairly and filed a lawsuit against Texaco alleging that Texaco had interfered illegally in the Pennzoil-Getty negotiations. Pennzoil won the case; in late 1985, it was awarded $11.1 billion, the largest judgment ever in the United States. A Texas appeals court reduced the judgment by $2 billion, but interest and penalties drove the total back up to $10.3 billion. James Kinnear, Texaco’s chief executive officer, had said that Texaco would file for bankruptcy if Pennzoil obtained court permission to secure the judgment by filing liens against Texaco’s assets. Furthermore, Kinnear had promised to fight the case all the way to the U.S. Supreme Court if necessary, arguing in part that Pennzoil had not followed the Security and Exchange Commission’s regulations in its negotiations with Getty. In April 1987, just before Pennzoil began to file the liens, Texaco offered to pay Pennzoil $2 billion to settle the entire case. Hugh Liedtke, chairman of Pennzoil, faced the choice of whether to accept the Texaco offer. His advisors were telling him that a settlement of between $3 and $5 billion would be fair, so one of his options was to make a counteroffer of $5 billion. If Liedtke were to counteroffer, assume Texaco would be twice as likely to refuse as accept the $5 billion counter offer. If Texaco would refuse, the case would go to court, where the judge would award Pennzoil $10.3 billion, or reduce the award to $5 billion, or award Pennzoil nothing. The probability that the judge would award Pennzoil nothing is about 50 percent, while the other outcomes were thought to be equally likely (25 percent probability).2

a. What is the best decision for Liedtke, and what is his expected payoff?

b. What is the expected payoff if Pennzoil counteroffers and Texaco refuses? Why is the expected payoff to the counteroffer higher than this?

c. Consider the probability that the judge would award Pennzoil nothing. How high would this probability have to go before the best decision would be to accept the $2 billion offer? (Assume that the probabilities of the other two outcomes are always equal.)

 

Calculate the price
Make an order in advance and get the best price
Pages (550 words)
$0.00
*Price with a welcome 15% discount applied.
Pro tip: If you want to save more money and pay the lowest price, you need to set a more extended deadline.
We know how difficult it is to be a student these days. That's why our prices are one of the most affordable on the market, and there are no hidden fees.

Instead, we offer bonuses, discounts, and free services to make your experience outstanding.
How it works
Receive a 100% original paper that will pass Turnitin from a top essay writing service
step 1
Upload your instructions
Fill out the order form and provide paper details. You can even attach screenshots or add additional instructions later. If something is not clear or missing, the writer will contact you for clarification.
Pro service tips
How to get the most out of your experience with MyhomeworkGeeks
One writer throughout the entire course
If you like the writer, you can hire them again. Just copy & paste their ID on the order form ("Preferred Writer's ID" field). This way, your vocabulary will be uniform, and the writer will be aware of your needs.
The same paper from different writers
You can order essay or any other work from two different writers to choose the best one or give another version to a friend. This can be done through the add-on "Same paper from another writer."
Copy of sources used by the writer
Our college essay writers work with ScienceDirect and other databases. They can send you articles or materials used in PDF or through screenshots. Just tick the "Copy of sources" field on the order form.
Testimonials
See why 20k+ students have chosen us as their sole writing assistance provider
Check out the latest reviews and opinions submitted by real customers worldwide and make an informed decision.

Notice: Array to string conversion in /home/myhomeworkgeeks/myhomeworkgeeks.com/wp-content/themes/proxim-canyon/widgets/reviews.php on line 18
Array
The writer did not follow my choice of topic (Food/Water Insecurity, Hunger, & Poverty), the paper was instead written about Climate Change in Africa. However, the paper was still great and informative. Thank you!
Customer 0, January 28th, 2022

Notice: Array to string conversion in /home/myhomeworkgeeks/myhomeworkgeeks.com/wp-content/themes/proxim-canyon/widgets/reviews.php on line 18
Array
THANK YOUUUUU
Customer 0, March 18th, 2021

Notice: Array to string conversion in /home/myhomeworkgeeks/myhomeworkgeeks.com/wp-content/themes/proxim-canyon/widgets/reviews.php on line 18
Array
Amazing!
Customer 0, November 11th, 2021

Notice: Array to string conversion in /home/myhomeworkgeeks/myhomeworkgeeks.com/wp-content/themes/proxim-canyon/widgets/reviews.php on line 18
Array
Always great! My son has been in critical health these last few semesters. Many times I have thought he wasn't going to make it and thought about quitting or postponing school until he was healthier but it always happens to be in the middle of the semester. This service has been a lifesaver for my mindset in helping keep my grades up and keep my son alive at the same time. I don't know if I could have made it through this period without it.
Customer 0, June 6th, 2022

Notice: Array to string conversion in /home/myhomeworkgeeks/myhomeworkgeeks.com/wp-content/themes/proxim-canyon/widgets/reviews.php on line 18
Array
The paper was not accused of plagiarism and was written very well. I will let you know the grade once it is graded. Thank you
Customer 0, April 26th, 2021

Notice: Array to string conversion in /home/myhomeworkgeeks/myhomeworkgeeks.com/wp-content/themes/proxim-canyon/widgets/reviews.php on line 18
Array
IThank you
Customer 0, April 6th, 2021

Notice: Array to string conversion in /home/myhomeworkgeeks/myhomeworkgeeks.com/wp-content/themes/proxim-canyon/widgets/reviews.php on line 18
Array
Thank you so much! I had to take my dog to the ER and had no time for the assignment. I really appreciate your help! I can't thank you enough! I really appreciate the work and integrity put into it. Thank you for taking it seriously and not bullshiting the paper.
Customer 0, July 26th, 2021

Notice: Array to string conversion in /home/myhomeworkgeeks/myhomeworkgeeks.com/wp-content/themes/proxim-canyon/widgets/reviews.php on line 18
Array
thank you!
Customer 0, October 21st, 2021

Notice: Array to string conversion in /home/myhomeworkgeeks/myhomeworkgeeks.com/wp-content/themes/proxim-canyon/widgets/reviews.php on line 18
Array
Very fast report with excellent information on the topic. Thank you for your speedy service in such a short time.
Customer 0, June 15th, 2022

Notice: Array to string conversion in /home/myhomeworkgeeks/myhomeworkgeeks.com/wp-content/themes/proxim-canyon/widgets/reviews.php on line 18
Array
Thank you
Customer 0, March 5th, 2022

Notice: Array to string conversion in /home/myhomeworkgeeks/myhomeworkgeeks.com/wp-content/themes/proxim-canyon/widgets/reviews.php on line 18
Array
Looks great and appreciate the help.
Customer 0, April 26th, 2021

Notice: Array to string conversion in /home/myhomeworkgeeks/myhomeworkgeeks.com/wp-content/themes/proxim-canyon/widgets/reviews.php on line 18
Array
Very well written and very impressed with this service!
Customer 0, February 16th, 2022
11,595
Customer reviews in total
96%
Current satisfaction rate
3 pages
Average paper length
37%
Customers referred by a friend
OUR GIFT TO YOU
15% OFF your first order
Use a coupon FIRST15 and enjoy expert help with any task at the most affordable price.
Claim my 15% OFF Order in Chat
Live ChatWhatsApp

Are You Looking For Assignment Help? We Can Certainly Assist You