Scientist, Self-Aware Systems; Co-founder, Center for Complex Systems Research
Costly Signalling

If something doesn't make sense, your go-to hypothesis should be "costly signalling." The core idea is more than a century old, but new wrinkles deserve wider exposure. Veblen's "conspicuous consumption" explained why people lit their cigars with $100 bills as a costly signal of their wealth. Later economists showed that a signal of a hidden trait becomes reliable if the cost of faking it is more than the expected gain. For example, Spence showed that college degrees (even in irrelevant subjects) can reliably signal good future employees because they are too costly for bad employees to obtain.

Darwin said, "The sight of a feather in a peacock's tail, whenever I gaze at it, makes me sick!" because he couldn't see its adaptive benefit. It makes perfect sense as a costly signal, however, because the peacock has to be quite fit to survive with a tail like that! Why do strong gazelles waste time and energy "stotting" (jumping vertically) when they see a cheetah? That is a costly signal of their strength and the cheetahs chase after other gazelles. Biologists came to accept the idea only in 1990 and now apply it to signalling between parents and offspring, predator and prey, males and females, siblings, and many other relationships.

Technology is just getting on the bandwagon. The integrity of the cryptocurrency "bitcoin" is maintained by bitcoin "miners" who get paid in bitcoin. The primary deception risk is "sybil attacks," where a single participant pretends to be many miners in an attempt to subvert the network's integrity. Bitcoin counters this by requiring miners to solve costly cryptographic puzzles in order to add blocks to the blockchain. Bitcoin mining currently burns up a gigawatt of electricity, which is about a billion dollars a year at US rates. Venezuela is in economic turmoil and some starving citizens are resorting to breaking into zoos to eat the animals. At the same time, enterprising Venezuelan bitcoin miners are using the cheap electricity there to earn $1200 per day. Notice the strangeness of this: By proving they have uselessly burned up precious resources, they cause another country to send them food!

As a grad student in Berkeley, I used to wonder why a preacher would often preach on the main plaza. Every time he would be harassed by a large crowd and I never saw him gain any converts. Costly signalling explains that preaching to that audience was a much better signal of his faith and commitment than would preaching to a more receptive audience. In fact, the very antagonism of his audience increased the cost and therefore the reliability of his signal.

A similar idea is playing out today in social media. Scott Alexander points out that the animal rights group PETA is much better known than the related group Vegan Outreach. PETA makes outrageous statements and performs outrageous acts which generate a lot of antagonism and are therefore costly signals. They have thrown red paint on women wearing furs and offered to pay Detroit water bills for families who agree to stop eating meat. They currently have a campaign to investigate the Australian who punched a kangaroo to rescue his dog. Members who promote ambiguous or controversial positions signal their commitment to their cause in a way that more generally accepted positions would not. For example, if they had a campaign to prevent the torture of kittens, everyone would agree and members wouldn't have a strong signal of their commitment to animal rights.

This connects to meme propagation in an interesting way. Memes that everyone agree with typically don't spread very far because they don't signal anything about the sender. Nobody is tweeting that "2+2=4." But controversial memes make a statement. They cause people with an opposing view to respond with opposing memes. As CGP Grey beautifully explained, opposing memes synergistically help each other to spread. They also create a cost for the senders in the form of antagonistic pushback from believers in the opposing meme. But from the view of costly signalling, this is good! If you have enemies attacking you for your beliefs, you better demonstrate your belief and commitment by spreading them even more! Both sides get this boost of reliable signalling and are motivated to intensify meme wars.

One problem with all this costly signalling is that it's costly! Peacocks would do much better if they didn't have to waste resources on their large tails. Bitcoin would be much more efficient if it didn't burn up the electricity of a small country. People could be more productive if they didn't have endless meme wars to demonstrate their commitments.

Technology may be able to help us with this. If hidden traits could be reliably communicated, there would be no need for costly signals. If a peacock could show a peahen his genetic sequence, she wouldn't have to choose him based on his tail. If wealthy people could reliably reveal their bank accounts, they wouldn't need luxury yachts or fancy cars. If bitcoin miners could show they weren't being duplicitous, we could forget all those wasteful cryptographic puzzles. With proper design, AI systems can reliably reveal what's actually on their minds. And as our understanding of biology improves, humans may be able to do the same. If we can create institutions and infrastructure to support truthful communication without costly signalling, the world will become a much more efficient place. Until then, it's good to be aware of costly signalling and to notice it acting everywhere!