" The auto industry and Silicon Valley are locked in a battle for control of one of the last unconquered screens: your car dashboard display. At stake are billions of dollars in revenue from ads and services as well as the balance of power between two big industries. And then there is the future of the dash itself, a source of endless complaints from drivers frustrated by its glitchy concoction of buttons and technologies.

Car makers, trying to overcome this poor track record, are counting on these few square inches to help build closer relationships with customers. Some fear handing control to Silicon Valley. Alphabet Inc. and Apple Inc., meanwhile, are itching to put their familiar screens and apps inside vehicles.

The current state of play is a confused free-for-all as the two industries circle each other warily. Some car makers are turning over their dashboard operating systems to Alphabet's Google entirely. Others, including BMW currently allows users to plug their Android and Apple phones into their system, but doesn't use the Android operating system to power its screens. BMW has worked to improve its own system since it surveyed its customers in 2015 and found that no one was using the expensive multimedia displays designed by the auto maker, turning to their phones instead to play music and pull up directions, according to the former executive."

The Battle for the Last Unconquered ScreenThe One in Your Car - WSJ By Tim Higgins and William Boston - April 6, 2019

Consider the following game in which Firms 1 and 2 simultaneously choose technology A (e.g., Android) or technology B (e.g., iOS).

Let ProfitiAAdenote firm i's profit if both firms adopt technology A, ProfitiBBdenote firm i's profit if both firms adopt technology B, ProfitiABdenote firm i's profit if firm i adopts technology A and firm j adopts technology B, and finally ProfitiBAdenote firm i's profit if firm i adopts technology B and firm j adopts technology A.

Suppose:

• Profit1AB>Profit1BB;
• Profit2AB> Profit2AA;
• Profit1AA> Profit1BAand
• Profit2BB> Profit2BA

a. What is the Nash equilibrium of the game? Explain (10 points)

b. Under what conditions (values of Profit) will this game represent a prisoner's dilemma?Explain (4 Points)