Good Genes Hypothesis
Visible costly signals that honestly correlate with underlying quality create sustainable competitive advantage.
The key test: does the costly signal predict actual quality? If yes, it's good genes signaling. If no, it's either runaway selection or dishonest signaling.
Some costly ornaments reliably correlate with genetic quality. The peacock's tail signals honest information - only healthy males can grow magnificent tails. Sickly peacocks produce inferior tails. Peahens benefit by choosing males with impressive tails because the trait correlates with good genes. This is different from arbitrary runaway selection. In good genes signaling, the costly display correlates with actual fitness. The preference is adaptive, not arbitrary. Offspring of peacocks with magnificent tails really do inherit better genes.
Business Application of Good Genes Hypothesis
Visible costly signals that honestly correlate with underlying quality create sustainable competitive advantage. Bang & Olufsen's minimalist speaker design signals engineering excellence (only sophisticated companies can make thin speakers sound good), and Patek Philippe's movement complexity signals watchmaking expertise. The key test: does the costly signal predict actual quality?