Consider a major retailer, such as Wal-Mart or Target. Such companies collect hundreds of thousands of credit card numbers every day to process transactions. In the past few years, hackers have borke into their security systems and stole those numbers, selling them on the black market. Suppose victims of this identity theft sue the retailers for negligence. Based on trial evidence, the judge estimates that: • additional security measures costing the retailer $10 million a year would prevent any sort of theft in the future; the likelihood of a major breach without these additional measures is 0.7% with the cost to consumers because of this breach of $1.1 billion ($1,100 million); and the likelihood of a minor breach without these additional measures is 2.5% with the cost to consumers because of this breach of $0.2 billion ($200 million). Using the Learned Hand Formula, predict how the judge would rule.

MATLAB: An Introduction with Applications
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Consider a major retailer, such as Wal-Mart or Target. Such companies collect hundreds of thousands of credit card numbers every day to process transactions. In the past few years, hackers have broken into their security systems and stole those numbers, selling them on the black market.

Suppose victims of this identity theft sue the retailers for negligence. Based on trial evidence, the judge estimates that:

- Additional security measures costing the retailer $10 million a year would prevent any sort of theft in the future;
- The likelihood of a major breach without these additional measures is 0.7% with the cost to consumers because of this breach of $1.1 billion ($1,100 million); and
- The likelihood of a minor breach without these additional measures is 2.5% with the cost to consumers because of this breach of $0.2 billion ($200 million).

Using the Learned Hand Formula, predict how the judge would rule.

- In favor of the customers, because B<pL.
- In favor of the retailers, because B<pL.
- In favor of the retailers, because B>pL.
- In favor of the consumers, because B>pL.
Transcribed Image Text:Consider a major retailer, such as Wal-Mart or Target. Such companies collect hundreds of thousands of credit card numbers every day to process transactions. In the past few years, hackers have broken into their security systems and stole those numbers, selling them on the black market. Suppose victims of this identity theft sue the retailers for negligence. Based on trial evidence, the judge estimates that: - Additional security measures costing the retailer $10 million a year would prevent any sort of theft in the future; - The likelihood of a major breach without these additional measures is 0.7% with the cost to consumers because of this breach of $1.1 billion ($1,100 million); and - The likelihood of a minor breach without these additional measures is 2.5% with the cost to consumers because of this breach of $0.2 billion ($200 million). Using the Learned Hand Formula, predict how the judge would rule. - In favor of the customers, because B<pL. - In favor of the retailers, because B<pL. - In favor of the retailers, because B>pL. - In favor of the consumers, because B>pL.
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