SIGNALLING THEORY

Introduction and applications

Diego Gambetta
Second Term 2011-12

19, 20, 21 March 2012, 11-13

22, 23 March 2012, 17-19

Sala del Capitolo, Badia Fiesolana

(10 Credits)

The course will consist of 5 two-hour sessions, which will be held over
one week, from 19 till 23 March 2012. Each session will comprise one
hour of lecture and one hour of discussion. Credits will be assigned on
the basis of an essay of 3000 to 4000 words to be delivered sometime
after the end of the course. Essay questions will be agreed during the
course.

Session topics

1. Principles and limits of signalling theory

2. Conflict: Signals of toughness
3. Cooperation: signals of trustworthiness I
4. Ancestors, founders, and pitfalls
5. Cooperation: signals of trustworthiness II (with Wojtek Przepiorka)

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 1 - Principles and limits of signalling theory (MON 19 MARCH, 11-13)

Can a truthful signaller still distinguish herself from a deceiving one? And if so how? Correspondingly, what
does a receiver need to find out who is telling the truth? This session will outline the basic tenets of the theory
and what it can and cannot explain.

Bliege Bird R, Smith EA. 2005. “Signaling Theory, Strategic Interaction, and Symbolic
Capital”. Current Anthropology 46: 221–248

Frank, Robert H.1988, Passions within reason, New York: Norton & C. Chapters 5 and 6

Gambetta D. 2009. “Signaling”. In P. Hedström and P. Bearman (eds.), The Oxford Handbook of
Analytical Sociology. Oxford: Oxford University Press. Chapter 8

Searcy, W. A., and S. Nowicki. 2005. The Evolution of Animal Communication. Princeton
University Press, Princeton, New Jersey. Introduction, pp. 1-23

Spence, Michael, 1974. Market Signaling. Cambridge: Harvard University Press. Chapters 1, 2,
3, 8, 11

Zahavi Amotz and Avishag Zahavi 1998. The Handicap Principle. Oxford: Oxford University
Press. Chapters 1, 2, 3, 12, 18

2 – Conflict: Signals of toughness (TUE 20 MARCH, 11-13)

In conflict there is much interest to exaggerate one’s strength and determination, which leads to cheap signals
being easily disregarded by opponents. And yet even in conflict there can be ‘honest’ signals which work to nearly
everyone advantage

Gambetta, Diego 2009. Codes of the Underworld. How Criminals Communicate. Princeton: Princeton
University Press. Chapter 4 and 5

Gould, Roger 2003. Collision of Wills: How Ambiguity about Social Rank Breeds Conflict. University
of Chicago Press. Esp. chapters 1, 2, 3

Hamill, Heather 2011. The Hoods: Crime and Punishment in Belfast. Princeton University Press.
Chapters 3 and 4

Kaminski, Marek 2004. Games prisoners play. Princeton: Princeton University Press. Chapters 2,
3, 4, 6

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 3 – Cooperation: Signals of Trustworthiness I (WED 21 MARCH, 11-13)

How to decide whether to trust a person, how to persuade others of one’s trustworthiness? Failures and mistakes
can cost people the opportunity for fruitful cooperation. Signalling theory is of crucial importance for
understanding the solution of trust games, and the two sets of games can be usefully and precisely associated

Bacharach M. & D.Gambetta, 2001, “Trust in signs”, in Karen Cook (ed.), Trust in Society New
York Russell Sage Foundation

Gambetta D. 2005. “Deceptive mimicry in humans”. In S. Hurley and N. Chater (eds.),

Perspective on Imitation: From Cognitive Neuroscience to Social Science, Cambridge: MIT Press, vol II,
pp. 221-241

Gambetta D. and H.Hamill 2005. Streetwise. How taxi drivers establish their customers’ trustworthiness.
New York: Russell Sage Foundation (with Heather Hamill)

4 - Ancestors and pitfalls (THU 22 MARCH, 17-19)

At its most basic the idea of signalling theory has been around for over a century. But its crude use aimed at
grand theorising is replete with pitfalls

Bourdieu P. [1972] 1977. Outline of a theory of practice. Cambridge UP. (pp.171-183)

Elster J. 1983. Sour grapes. Cambridge UP (pp.66ff.)

McAdams R.H. 2001. Signaling discount rates: Law, Norms, and Economic Methodology. Yale
Law Journal, 110, 625-689 [critical review of Eric Posner’s]

Miller, Geoffrey F. 1998. Review of “The Handicap Principle” by Amotz Zahavi. Evolution and
Human Behavior, 19 (5), 343-347

Posner, Eric 2000. Law and social norms. Cambridge, Mass.: Harvard University Press

Veblen, Thorstein [1899] 1994. The theory of the leisure class. New York: Dover Publications

Veyne, Paul 1976. Le pain et le cirque. Paris: Edition du Seuil, pp.94 ff.

5 - Cooperation: Signals of Trustworthiness II – with Wojtek Przepiorka

(FRI 23 MARCH, 17-19)

Can charitable giving be intended and perceived as a signal of trustworthiness? This session shows how
signalling theory helps us understand altruism, reciprocity, and reputation in repeated interactions

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Albert, Max, Werner Güth, Erich Kirchler, and Boris Maciejovsky. 2007. "Are we nice(r) to
nice(r) people? An experimental analysis." Experimental Economics 10:53-69.

Bereczkei, Tamas, Bela Birkas, and Zsuzsanna Kerekes. 2010. "Altruism towards strangers in
need: costly signaling in an industrial society." Evolution and Human Behavior 31:95-103.

Fehrler, Sebastian and Wojtek Przepiorka. 2012. “Charitable giving as a signal of

trustworthiness: Disentangling the signaling benefits of altruistic acts.” Mimeo, Oxford.

Milinski, Manfred, Dirk Semmann, and Hans-Jürgen Krambeck. 2002. "Donors to charity gain
in both indirect reciprocity and political reputation." Proceedings of the Royal Society London B
269:881-883.

Nowak, M.A. and Karl Sigmund. 2005. "Evolution of indirect reciprocity." Nature 437:1291-
98.

Additional optional readings

Overviews

Connelly, Brian L., S. Trevis Certo, R. Duane Ireland and Christopher R. Reutzel 2011.
“Signaling Theory: A Review and Assessment”. Journal of Management 2011 37: 39-67

Riley, J. (2001). “Silver Signals: Twenty-Five Years of Screening and Signaling”, Journal of
Economic Literature 39, pp. 432-478

Theory

Feltovich, Nick, Richmond Harbaugh, and Ted To, (2002) “Too Cool for School? Signaling
and Countersignaling,” RAND Journal of Economics, 33:4, 630-649

Grafen, A., 1990a, “Biological signals as handicaps”, J. Theor. Biol. 144, 517–546 [article that
gave game theoretic foundations to Zahavi’s intuition]

Applications and tests across the social sciences

Centorrino, Samuele, Elodie Djemai, Astrid Hopfensitz, Manfred Milinski, Paul Seabright,
2010. Honest Smiles as a Costly Signal in Social Exchange, Behavioral and Brain Sciences (2010),
33, pp 439-439

Fearon, Jim, 1997. Signaling Foreign Policy Interests: Tying Hands versus Sinking Costs The
Journal of Conflict Resolution, Vol. 41, No. 1, pp. 68-90

Kübler, Dorothea, Wieland Müller and Hans-Theo Normann (2008). “Job Market Signaling
and Screening: An Experimental Comparison.” Games and Economic Behavior 64, pp. 219-236.

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Nelissen, Rob M.A., Marijn H.C. Meijers, 2011. Social benefits of luxury brands as costly
signals of wealth and status. Evolution and Human Behavior [forthcoming]
Przepiorka, Wojtek 2011. “Ethnic Discrimination and Signals of Trustworthiness in an Online
Market: Evidence from Two Field Experiments” Zeitschrift für Soziologie 40(2): 132-141
Bliege Bird R, Smith E, and Bird DW. 2001. The hunting handicap: costly signaling in human
foraging strategies. Behavioral Ecology and Sociobiology 50:9-19.

Boster JS, Yost J, and Peeke C. 2003. Rage, Revenge, and Religion: Honest Signaling of
Aggression and Nonaggression in Waorani Coalitional Violence. Ethos 31:471-494.

Cronk L, and Dunham B. 2007. Amounts Spent on Engagement Rings Reflect Aspects of
Male and Female Mate Quality. Human Nature 18:329-333.

Gurven M, Allen-Arave W, Hill K, and Hurtado M. 2000. "It's a Wonderful Life": signaling
generosity among the Ache of Paraguay. Evolution and Human Behavior 21:263-282.

Ruffle B, and Sosis R. 2007. Does it pay to pray? Costly ritual and cooperation. The B.E. Journal
of Economic Analysis and Policy 7:1–35.

Smith EA, Bird RB, and Bird DW. 2003. “The benefits of costly signaling: Meriam turtle
hunters”. Behavioral Ecology 14:116-126.

Sosis, Richard 2006. “Religious Behaviors, Badges, and Bans: Signaling Theory and the
Evolution of Religion”. In: Where God and Science Meet: How Brain and Evolutionary Studies Alter
Our Understanding of Religion, Volume 1: Evolution, Genes, and the Religious Brain, ed. Patrick
McNamara, pp. 61-86, Westport, CT: Praeger Publishers.

Sosis, Richard, Howard C. Kressb, James S. Bosterb. 2007. Scars for war: evaluating alternative
signaling explanations for cross-cultural variance in ritual costs, Evolution and Human Behavior
28, 234– 247