Suppose that the qi type has a reservation wage of ri 0, with r2 r1 0. Show that ‘lemon’ like results can arise in the pooling ICE. Suppose that r2 q2 and consider the possible outcomes in the...

Suppose that the qi type has a reservation wage of ri 0, with r2 r1 0. Show that ‘lemon’ like results can arise in the pooling ICE. Suppose that r2 q2 and consider the possible outcomes in the separating ICE. What are the utility gains and losses from signalling?