Gresham's Law

Biological Parallel

Bad signals drive out good when receivers can't distinguish quality. Vervet monkeys issue alarm calls warning of predators—but if fake alarms work as well as real ones, cheaters proliferate until nobody responds. Mathematical models show that without enforcement, signal reliability collapses toward chance levels. Cleaner wrasse at coral reef cleaning stations face the same dynamic: cheating cleaners bite clients instead of removing parasites. Male cleaner wrasse solve this by aggressively punishing female partners who cheat—chasing and biting them—because client fish leave stations with bad reputations. Fireflies demonstrate the most extreme case: Photuris females mimic the flash patterns of Photinus females to lure males, then eat them—acquiring defensive chemicals (lucibufagins) they can't synthesize themselves. When mimics become common enough, the original honest signal becomes death. The biological parallel to Gresham's Law: honest signals require either costs that cheaters can't afford (the handicap principle) or enforcement mechanisms that punish deception. Without these, the ecosystem degrades to mutual distrust.