ibrium to figure out what offer the insurance company will make. Assume their trial costs are also $10,000 [Draw the decision tree for this case too].

(I): Draw the decision tree for the problem as described. What should your client do? Please justify your selection. How, if at all, would your answer change if you allow for the fact that your client is risk averse [Prefers lower risk process]?(II): Consider the same situation as in (I), except that there are now two players–you and the insurance company. The insurance company starts by deciding how large a settlement to offer–$50,000, $100,000, or $150,000. You then decide whether to accept it. Use the idea of a sub game perfect equilibrium to figure out what offer the insurance company will make. Assume their trial costs are also $10,000 [Draw the decision tree for this case too].