Suppose that it will cost the plaintiff and defendant $2000 each to litigate a dispute. The plaintiff is optimistic that she will win, with expected probability .75, but is pessimistic about the amount of damages, expecting to receive only $20,000. The defendant, on the other hand, thinks his chances are only .5 of winning, but believes that if he loses the court will award the plaintiff $40,000. Will they settle or litigate under the American system? Provide a numerical proof of your answer.