What Is Signaling, Really?

I enjoyed this post.

It also hints at the notion of signaling equilibria. Consider the Helen of Troy example - this is clearly not an equilibrium, because Helen ends up marrying a bankrupt. Soon "spends lots of money on diamonds" will no longer be a signal of wealth, but will instead be a signal of profligacy - as indeed it is where I live. A man walking around in flashy jewellery would be considered low-class, presumably because in the past there has been exactly this signaling reversal.

In a stable signaling equilibrium, the signal needs to be hard-to-fake. This is why easy-to-fake signals are unstable - in the flowers example, the proles can and will catch on, and switch to the upper-middle-class flowers, so the upper-middle-class have to keep moving to stay ahead of them. The same phenomenon is seen in baby names, where upper-middle-class names become prole after a generation.

One thing I would have preferred is a discussion of the positive externalities of signaling, not just the negative ones. For example, if Yvain and lukeprog are both trying to signal their superior intelligence by writing insightful posts, this may get into an "arms race" for them, losing utility. However, the Lesswrong community gains utility overall. I think the externalities of signaling are generally positive in the real world, they only tend to be negative in what are anyway zero-sum games (e.g. begging).

Be warned! Signaling that you understand signaling is a terrible signal, because it throws all your other signals into doubt. Revealing that you are optimizing your signaling separately (for example, talking about "PUA") is among the worst signals of all.

A simple, interesting, complementary fact is that the cigarette manufacturers all saw profits skyrocket when laws started banning cigarette ads on TV. All of their products are largely interchangeable, so advertising doesn't tell you anything new about the product, it just builds brand loyalty. So it saves everyone costly signalling.

It's also extremely difficult for new cigarette manufacturers to break into the market. It's very hard to use a really clever ad campaign to increase your market share when you're not allowed to advertise on TV. Curiously, this may actually harm consumers, in that it prevents competition from lowering cigarette prices. I suppose this analogizes to the idea that if everyone were suddenly banned from displaying their wealth, it would be very difficult to woo Helen of Troy unless you had clearly shown your wealth prior to the ban. Thus, banning signalling can lead to losses, as the wealthiest suitor may be unable to woo Helen if he came to the game too late.

I had long ago (but after being heavily influenced by Overcoming Bias) thought that signaling could be seen simply as a corollary to Bayes' theorem. That is, when one says something, one knows that its effect on a listener will depend on the listener's rational updating on the fact that one said it. If one wants the listener to behave as if X is true, one should say something that the listener would only expect in case X is true.

Thinking in this way, one quickly arrives at conclusions like "oh, so hard-to-fake signals are stronger" and "if everyone starts sending the same signal in the same way, that makes it a lot weaker", which test quite well against observations of the real world.

Powerful corollary: we should expect signaling, along with these basic properties, to be prominent in any group of intelligent minds. For example, math departments and alien civilizations. (Non-example: solitary AI foom.)

Possibly a side issue, but one motivation for signalling occurs when measurement is difficult for some reason e.g. regulation.

Giving prospective employees an IQ test can be quite hazardous for the employer. http://en.wikipedia.org/wiki/Intelligence_and_public_policy

Spending $50,000 on college - and incurring toxic student debt in the process - to prove something that can be demonstrated by a $500 test seems strange, in the absence of other factors. Particularly when colleges use a near-IQ test (SAT) as one important criterion for admission!

When I was studying under Amotz Zahavi (originator of the handicap principle theory, which is what you're actually discussing), he used to make the exact same points. In fact, he used to say that "no communication is reliable unless it has a cost".

Having this outlook on life in the past 5 years made a lot of things seem very different - small questions like why some people don't use seatbelts and brag about it, or why men on dates leave big tips; but also bigger questions like advertizing, how hierarchical relationships really work, etc.

Also explained a lot about possible origins of (some) altruistic behaviors; Zahavi's favorite examples were from the research he and his wife conducted, wherein they observed small groups of social birds (forgot the species, sorry) where altrusitic behavior is common. And it turns out, it's the dominant birds who behave altrusitically, rather than exploit their weaker brethren - but doing so as a show of strength. My own favorite example is when a lower-status male caught a worm and tried feeding it to the alpha male. The latter proceeded to beat him up, take the morsel, and force-feed it back to the weaker male.

Best course I ever took :)

A new perspective on rational charities and inefficient fuzzy-purchasing:

Donating to charity is an expensive signal of high moral character or status. Enough people have caught on to this signalling method that in order to signal with your donations now, you have to donate to some 'conspicuous consumption'-style charity (kittens with rare diseases, receiving visits from their rockstar idols).

50% chance of failing

Except in real life, the #1 signaling college has a graduation rate of 98% and an average Grade Point Average of A-.

As the saying goes, the "only way to flunk out of Harvard is to die of a heroin overdose."

Related to your point about Super Bowl commercials, here's an article saying that good targeting makes online ads less effective because targeting removes the need for expensive signaling. Though it doesn't cite any hard data.

I had not heard of the less versus fewer distinction mentioned above, and so checked the dictionary; here is the usage note:

Usage note
Even though less has been used before plural nouns ( less words; less men ) since the time of King Alfred, many modern usage guides say that only fewer can be used in such contexts. Less, they say, should modify singular mass nouns ( less sugar; less money ) and singular abstract nouns ( less honesty; less love ). It should modify plural nouns only when they suggest combination into a unit, group, or aggregation: less than $50 (a sum of money); less than three miles (a unit of distance). With plural nouns specifying individuals or readily distinguishable units, the guides say that fewer is the only proper choice: fewer words; fewer men; no fewer than 31 of the 50 states.
Modern standard English practice does not reflect this distinction. When followed by than, less occurs at least as often as fewer in modifying plural nouns that are not units or groups, and the use of less in this construction is increasing in all varieties of English: less than eight million people; no less than 31 of the 50 states. When not followed by than, fewer is more frequent only in formal written English, and in this construction also the use of less is increasing: This year we have had less crimes, less accidents, and less fires than in any of the last five years.

I would not dare to summarize Fussell's guide here, but it shattered my illusion that I mostly avoid thinking about class signals, and instead convinced me that pretty much everything I do from waking up in the morning to going to bed at night is a class signal.

This is a very readable and interesting guide, and it may have been dead-on accurate in 1983 when it was written. But the kind of class system he describes, one defined by social signals and not by (say) brute force or even money, can only exist in a unified culture, in which everybody speaks the same "language" of signals. To use the example from the gude, Mr. Blue [collar] and Mr. White [collar], who make about the same income, both have to acknowledge on some level that Mr. White socially outranks Mr. Blue. Furthermore, Mr. Blue and Mr. White both would both have agreed that the Rockefellers, Pews, DuPonts, Mellons, Fords, and Vanderbilts constituted the top out-of-sight class.

I'd guess that America today has a much more fragmented class system now than it did when Fussel wrote, at least in some ways.

ETA:

it may have been dead-on accurate in 1983 when it was written...

On second thought, the 60's counterculture had already undermined at a lot of the old WASP culture he describes, replacing it with -- sure enough -- a counterculture.

For example, why did about 50% of readers get a mental flinch and an overpowering urge to correct me when I used “less” instead of “fewer” in the sentence above?

At least you didn't confuse "discreet" and "discrete". That drives me up the wall!

So, what are you signalling with this post?

This is a good, basic, well written introduction to what signaling is. Signaling is a quite vital concept that is often not easy to explain, and so it's nice to have a well written article that explains it well. I definitely will be directing people to this article in the future.

I appreciate the value of the illustrations, but it would be good to find a version that doesn't assume that women are merely materialistic, assessing prospective mates solely on their net worth. Geek communities are often not friendly places for women - some readers will accept the assumptions for the sake of argument, but some are likely to take offence.

Edited when MixedNuts pointed out how confused the original version was. My apologies.

Your numerical model at the beginning looks incoherent.

Suppose, there are two kinds of people, smart people and stupid people; and suppose, with wild starry-eyed optimism, that the populace is split 50-50 between them. Smart people would add enough value to a company to be worth a $100,000 salary each year, but stupid people would only be worth $40,000.

If employers could never distinguish between smart and stupid, even after hiring, then they could select randomly and pay $70,000 per year (the expected value per hire given the 50:50 ratio). If they can eventually distinguish, then they could pay this salary to new graduates (who have not worked before), and then adjust salaries after detecting student types.

Why? Consider the thought process of a smart person when deciding whether or not to take the course. She thinks “I am smart, so if I take the course, I will certainly pass. Then I will make an extra $60,000 at this job. So my costs are $50,000, and my benefits are $60,000. Sounds like a good deal.

This seems to assume one will only stay on the job for 1 year. In a world where initially employers are paying $70,000 for a 50:50 mix of smart and stupid for 1 year, the smart person will only get an income gain of $30,000 for a $50,000 cost. So no one will start taking the course. But your other claims are incompatible with staying more than 1 year.

The stupid person, on the other hand, thinks: “As a stupid person, if I take the course, I have a 50% chance of passing and making $60,000 extra, and a 50% chance of failing and making $0 extra. My expected benefit is $30,000, but my expected cost is $50,000. I'll stay out of school and take the $40,000 salary for non-graduates.”

This assumes that one will stay in the job for only one year. But if one will get to stay in the job for 2 years, then the benefit is doubled and everyone would benefit by taking the course.

And in a world where everyone takes the course those with passing scores will be 75% smart and 25% dumb, with an expected productivity of $85,000, not $100,000, so employers could not afford the $100,000 salary.

I'm curious, was the Art History comment a dig at Michael Lewis?

What are the costs associated with flowers?

Nitpick:

The stupid person, on the other hand, thinks: “As a stupid person, if I take the course, I have a 50% chance of passing and making $60,000 extra, and a 50% chance of failing and making $0 extra. My expected benefit is $30,000, but my expected cost is $50,000. I'll stay out of school and take the $40,000 salary for non-graduates.”

...assuming that stupid people all know they're stupid, and that they're all perfectly rational experts at game theory

There's no game theory in that calculation.

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Link to Paul Fussell's “Guide Through The American Class System” essay is dead, here is an archive of the page.

That article was an interesting read but now I'm having a bout of status anxiety :/.

Seriously, read the essay.

On the other hand:

The sad thing is that by the time one's an adult, these stigmata are virtually unalterable and ineffaceable. We're pretty well stuck for life in the class we're raised in. Even adopting all the suggestions implied in this chapter, embracing all the high-class locutions and abjuring the low ones, won't help much.

This sentence is a HUGE RED FLAG: “it shattered my illusion that I mostly avoid thinking about class signals, and instead convinced me that pretty much everything I do from waking up in the morning to going to bed at night is a class signal.”

If signaling can explain everything, then it is in the same category as Freudian psychoanalysis—unfalsifiable and therefore useless.

The idea that signaling explains everything leads to the idea that “people who say that they don’t bother with signaling and don’t use the symbols available to them are REALLY just signaling that they are the kind of person who can afford to not care about signaling.”

This is not the conclusion of a respectable theory; this is mental gymnastics. Having a theory that can explain anything is identical to having no clue.

I’ll admit that this post is the extent of my knowledge of signaling, so others might have fleshed-out the theory to the point that it can make predictions, but this essay was too much representativeness heuristic and not enough evidence.

Signals by Brian Skyrms is a great book in this area. It shows how signalling can evolve in even quite simple set-ups.

Is "Guide Through the American Class System" supposed to be on the MIRI research guide?

Or where can I find this mailing list to which Yvain refers?

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.

The cost of conveying information should not be described as a "waste".

Does this means all fashion is signalling ?

If you enjoyed Paul Fussell I highly recommed Bourdieu's "Distinction".

It addresses many of the criticisms about class and taste claims expressed in the comments: It is extremely data-driven instead of relying on 'common knowledge'. It describes not only how different classes' tastes differ but how those difference evolve over time, and not only a single hierarchy of classes but the different fields in which classes operate.

Bourdieu doesn't seem to be part of the lesswrong canon, but could well be. He has an undeserved reputation as (only) a theorist, whereas to me his strength is in his use of large bodies of data (but not experiments, alas). The books can be heavy going and to remind of diseased discplines, but the data is great.

One non-obvious implication of signaling theory is how attempts at egalitarian norms/policy can have bad effects. The direct effect of these policies and/or norms is to make it easier for people not possessing some desired characteristic to emulate the behavior of those that do. The effect is to make it harder to signal, and thus results in more resources wasted on signaling games.

More about gardens and signalling: Michael Pollan's Second Nature has a section about class and regional signals in seed catalogues.

This post, by its contents and tone, seems to really emphasize the downside of signaling. So let me play the other side.

Enabling signaling can add or subtract a huge amount of value from what would happen without signaling. You can tweak your initial example to get a "rat race" outcome where everyone, including the stupid people, sends a costly signal that ends up being completely uninformative (since everyone sends it). But you can also make it prohibitively mentally painful for stupid people to go to college, versus neutral or even enjoyable for smart people (instead of there being an actual economic cost of engaging in signaling), with a huge gain to employers for being able to tell them apart.

one can look at Nikolai Roussanov's study on how the dynamics of signaling games in US minority communities encourage conspicuous consumption and prevent members of those communities from investing in education and other important goods.

As a counterpoint to this, in other cases the signaling value of education may induce people to get more education than is individually optimal, which is actually a good thing socially if you think education has large positive externalities. And if you work hard and discover a cure for cancer, you will be paid largely through other people's opinions of you, now that you've signaled to them that you are such an intelligent and hard-working and socially-conscious person. (You were just as intelligent before you cured it, but now they know). Since you cannot possibly hope to recoup even a modest fraction of the social value you will have created, that's unambiguously good for incentives.

On any other site, I would probably get away with saying: Since invention is basically the reason for our high modern standards of living, if signaling seriously encourages it, then in the long run the positive value of signaling would seem to dwarf any losses discussed above (even the "poverty" of some minority communities is nothing compared to the poverty in all of our shared historical past). But here...well, here we are pretty worried about where our invention spree might be leading us.

why did about 50% of readers get a mental flinch and an overpowering urge to correct me when I used “less” instead of “fewer” in the sentence above?

I didn't, and I suspect the percentage of readers who did is much smaller.