Signaling

• Signaling is a method of conveying information among not-necessarily-trustworthy parties by performing an action which is more likely or less costly if the information is true than if it is not true. Because signals are often costly, they can sometimes lead to a depressing waste of resources, but in other cases they may be the only way to believably convey important information.
• Most of our everyday actions can be traced back to some form of signaling or status seeking.
  • A classic example of this would be a luxury watch: A Rolex isn't better at telling the time than a cheap Casio – but a Rolex signals something about its owner's economic power and thus their social standing.
  • When signaling, the more expensive and useless the item is, the more effective it is as a signal. Although eyeglasses are expensive, they're a poor way to signal wealth because they're very useful; a person might get them not because they is very rich but because they really needs glasses. On the other hand, a large diamond is an excellent signal; no one needs a large diamond, so anybody who gets one anyway must have money to burn.
• Our brains deliberately hide this fact from us and others (self deception). Be mindfull of your actions.
• Signaling can be broken down into different components:
  • Signal Message: This is whatever (hidden) subtext you are trying to convey.
  • Signal Distribution: The method of distributing the signal message.
  • Signal Amplification: How do you make sure your message stand out?
• Software perfectly complements physical goods by distributing their signal messages at scale. Maximizing scale, however, prevents it from monetizing said distribution. This is why social media services are free to use. The added signaling value is solely captured by the physical products that are being shared.