You’ve seen two outcomes in the market for used cars. Without warranties, there is only one message visible to the buyer: All cars look the same. So there is one price regardless of whether the car is a good car or a lemon. It is as if all the cars, good ones and lemons, are in one big pool. We call the outcome in a market when only one message is available and an uninformed person cannot determine quality a pooling equilibrium . In the example above, only lemons were traded. But in