For signalling to work to solve adverse selection then: (i) it cannot be possible for the signal to be copied by sellers of low quality products
(ii) it credibly informs an uninformed party that the product is high quality
(iii) it must be restricted to the education market
A)(i) only
B)(i) and (ii)
C)(i) and (iii)
D)(ii) and (iii)

Question

Quizplus · Accepted Answer

Both (i) and (ii) are necessary for signalling to work in solving adverse selection. (iii) is not relevant to the effectiveness of signalling in general, as signalling can be used in various markets and industries.

For Signalling to Work to Solve Adverse Selection Then: (I)