In a market where there is signaling, a separating equilibrium occurs when economic agents separate their actions as consumers from their actions as producers.

Question

Quizplus · Accepted Answer

In a market with signaling, a separating equilibrium occurs when different types of economic agents (e.g., those of different quality or type) adopt distinct strategies or signals to distinguish themselves from each other, not specifically separating consumer actions from producer actions.

In a Market Where There Is Signaling, a Separating Equilibrium