Signals are believed because they are expensive to fake, so waste is what makes them informative.
Zahavi's 1975 argument, resisted for years and then vindicated: the peacock's tail is credible because it is costly. Advertising spend, engagement rings and university degrees carry information for the same reason.
In practice
- A candidate who relocates and takes a pay cut for a role signals commitment more credibly than any statement in the interview.
- A supplier who invests in tooling specific to one buyer has made a signal that cannot be faked cheaply.