The existence of a separating equilibrium depends upon differences in
A) opportunity cost
B) sunk cost
C) marginal cost

Question

Quizplus · Accepted Answer

A separating equilibrium occurs when each player chooses a different option based on their private information, and this can only occur if there are differences in opportunity cost between the options. Sunk costs and marginal costs may be different, but they do not necessarily lead to separating equilibria.

The Existence of a Separating Equilibrium Depends Upon Differences in