Signaling

<-NARRATOR:-> Now listen to part of a lecture in a business class.
<-MALE PROFESSOR:-> So OK, here's a good example.
A friend of mine owns a small jewelry store where she sells jewelry.
And the jewelry she sells-watches, rings, necklaces-
is very expensive,
thousands of dollars,
because it's all real gold, real diamonds, and other precious gemstones.
So of course, when customers come into her store...
well, if they're considering spending that much money on a piece of jewelry,
they want to make sure it's authentic,
that the gold is real,
that the gemstones are real and not just pieces of glass.
But most customers don't actually know how to tell the difference, on their own.
So in order to reassure her customers, what my friend did, is
she had a jewelry expert come in and look at all the jewelry in her store.
This expert had like twenty years of experience examining jewelry, so he knew a lot about it...
and the expert examined all the precious gemstones
and certified that they were authentic...
real. And then my friend put up a sign in the store saying that all the jewelry in the store
had been certified as authentic by a leading expert...
so her customers would see this sign
and know that all the jewelry in the store was real.
And since the expert didn't work for my friend's store,
it didn't matter to him if the jewelry got sold or not...
so customers were likely to trust his opinion.
The expert was therefore able to provide evidence
that the jewelry was worth the high prices.