Common use of Risk Aversion Clause in Contracts

Risk Aversion. Generic firms may be (more) risk averse than branded firms and hence sus- ceptible to settling with the originator than taking a chance in court. In fact, they may not even mount a challenge unless the patent is sufficiently weak. To check this, we modified the payoffs in the game tree to be exponential utility function r of net profits V˜T # for generic firms. Specifically, we use the form ((1 — e−aV˜T # )/a if a /= 0 r(V˜j ) = V˜T #