When analyzing cases of signaling,economists tend to focus their attention primarily on:
A) general equilibria.
B) pooling equilibria.
C) separating equilibria.
D) asymmetric equilibria.

Question

Quizplus · Accepted Answer

When analyzing cases of signaling, economists tend to focus their attention primarily on separating equilibria. This is because separating equilibria occur when one type of player (e.g., high-quality) sends a signal that distinguishes them from another type of player (e.g., low-quality). These types can then achieve higher payoffs by playing different strategies, allowing for a more efficient outcome. Pooling equilibria, on the other hand, occur when both types choose the same strategy, making it difficult to distinguish between them. General equilibria and asymmetric equilibria are broader concepts that do not specifically apply to signaling games.

When Analyzing Cases of Signaling,economists Tend to Focus Their Attention