Evolution
Costly Signaling
Signals that are reliable because they are expensive to produce or maintain. The cost ensures honesty: only individuals with true underlying quality can afford the signal.
Biological Context
The peacock's tail is costly to grow and maintain, and attracts predators. Only healthy males with good genes can afford it. Stotting by gazelles is energetically expensive, honestly signaling escape ability. Costly signals solve the problem of cheap talk.
Business Application
Business costly signals: expensive office locations, lavish entertaining, difficult credentialing. These signals work because they're hard to fake. The challenge is distinguishing useful costly signals from wasteful expenditure.