12. (6 points) Two firms are choosing whether to upgrade their product line (e.g, mobile phones). The payoffs are as follows: Firm 1 Firm 2 Upgrade Don't Upgrade 12 12 8 15 Don't 15 8 9 9

(a) Suppose Firm 1 moves first and Firm 2 sees Firm 1's decision before making their decision. What is the solution of this game (the solution found using the rollback method, or "look ahead and reason back" method, or backwards induction)? Draw the sequential game for partial credit (b) Would your answer change if Firm 2 chose first? Explain.

(c) Is this a prisoner's dilemma?