Three-spined Stickleback

The red is real—until the water gets muddy. Then cheaters thrive.

Male sticklebacks turn vivid red during breeding season using carotenoid pigments they cannot synthesize—they must extract them from their diet. This creates an honest signal: only males with access to high-quality food and the health to absorb carotenoids can produce intense red coloration. Research confirms that females prefer redder males, and their choice predicts real outcomes: redder males live longer, have better sperm, and provide more parental care.

The signal's honesty comes from a biochemical trade-off. Carotenoids serve multiple functions: immune defense, antioxidant protection, sperm quality, and sexual display. A male who diverts carotenoids to coloration leaves fewer for health maintenance. Only genuinely healthy males can afford this allocation—sickly males who try to fake intense red leave themselves vulnerable to oxidative stress and can't maintain coloration through the breeding season.

But here's where sticklebacks reveal something crucial about signal environments: pollution disrupts the system. In turbid water caused by algal blooms or runoff, visibility drops. Social monitoring becomes difficult. Research found that in murky conditions, males in poor condition reduced their courtship effort when competitors were present—but only in turbid water. In clear water, competitors enforce honesty by exposing cheaters. In turbid water, cheaters escape detection.

The 2008 financial crisis was turbid water. Credit default swaps created complexity that obscured risk. Rating agencies couldn't—or wouldn't—see through the murk. Goldman Sachs could sell synthetic CDOs while betting against them because the market's monitoring capacity had collapsed. When visibility returned, so did price discovery: AAA-rated securities revealed as junk, honest signals restored through painful recalibration.

Enterprise software demos illustrate the same principle. Products shine in controlled presentations—the corporate equivalent of clear water with perfect lighting. But deployment happens in production environments where complexity creates turbidity. The demo-to-deployment gap persists because customers can't easily monitor real-world performance before purchasing. Oracle, Salesforce, and SAP have all faced lawsuits over implementation failures that looked nothing like the sales pitch.

The stickleback suggests this isn't random—it's predictable. When monitoring costs rise (turbidity increases), cheating becomes more viable. When visibility improves, honesty returns. Markets cycle between these states.

For organizations: map your signal environment. Where is information clear? Where is it murky? In clear zones, invest in genuine quality—fakers get caught. In murky zones, either invest in monitoring infrastructure or discount the signals you receive. The stickleback's preference for red works brilliantly in clean water. In turbid water, she's selecting for the best cheaters.