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How does anyone really know that they’ve picked the right baby formula, soda or car? They don’t, and manufacturers know that. That’s why our economy is filled with highly promoted branding campaigns that, however superficial or annoying, can be enormously helpful guides.
it’s less likely to squander its name by skirting the rules or engaging in shoddy manufacturing than a company with less to lose.
Economists have a name for these cues that companies employ to convey their hidden strength: signaling.
the mere act of paying for a pop-star endorser sends a subconscious signal that their product is so successful that, well, they can afford Nicki Minaj.
It also signals that the company is too heavily invested to turn out a shoddy product.
I had assumed that kind of signaling was destined to be a relic of the pre-Internet age — a time when people couldn’t pull up an objective review on their phones while perusing the soda aisle. According to some economists, however, signaling seems to be increasing throughout our economy. Why are we listening to signals when we can do the research ourselves?
The Internet is, among other things, a massive, chaotic marketplace. Too much information, it turns out, is a lot like no information. “If we researched every single purchase, we wouldn’t have time to make any purchases,”
Signaling can be a shorthand to identify whom you want to buy from. That’s why we may need it now more than ever.
“The lower price, it bothered me,” he said, indicating that he saw the discount as a signal that the company was willing to cut every cost imaginable. He ended up paying an extra $100 for some peace of mind
I figure that it's less likely to squander its name by skirting the rules or engaging in shoddy manufacturing than a company with less to lose. This peace of mind costs me about $7 per day.
Economists have a name for these cues that companies employ to convey their hidden strength: signaling.