Handicap Principle
Honest signaling requires costly commitments competitors cannot easily match.
Honesty is expensive. That expense is the proof.
In 1975, Israeli biologist Amotz Zahavi proposed the handicap principle: signals remain honest when they are costly to produce in ways that only high-quality signalers can afford. A peacock's enormous tail is honest not despite being a handicap but because it is a handicap. Growing and maintaining a three-foot-long tail covered in iridescent eyespots requires metabolic resources. Carrying the tail reduces mobility, making the peacock more vulnerable to predators. Only healthy, well-fed males can survive while burdened with such elaborate tails.
Business Application of Handicap Principle
Honest signaling requires costly commitments competitors cannot easily match. The cost is the credibility mechanism - like Costco's margin caps or Vanguard's ownership structure.
Discovery
Amotz Zahavi (1975)
Resolved the paradox of why low-quality individuals don't fake high-quality signals