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Costly signaling theory

Dr. Simon Moss

Overview

Many customers prefer to purchase products or services that are regarded as green--are designed to preserve the environment& interestingly, however, a large percentage of these individuials are are not actually concerned with the environment. For example, owners of the Toyota Prius, a hybrid verhicle that is more expensive than similar counterparts but consumes less fuel, were asked to specify their top five reasons why they purchased this car (Maynard, 2007, cited in Griskevicius, Tybur, & Van den Bergh, 2010). Conservation was not high on the list. Instead, many of the respondents conceded the car "makes a statement about me".

This finding indicates that individuals might often choose to engage in responsible behavior partly to assert their status. Indeed, consistent with this possibility, when the perceived important of status increases, individuals are often more inclined to prefer products the preserve the environment (e.g., Griskevicius, Tybur, & Van den Bergh, 2010).

Costly signaling theory can explain these observations (see Miller, 2000, Zahavi, 1975). Specifically, according to this theory, both animals and humans often engage in altruistic acts--acts that seem to involve a sacrifice--primarily to convey or communicate a signal about themselves (Gintis, Bowles, Boyd, & Fehr, 2007). For example, individuals often enact some altruistic behavior to show they are elevated in status, called competitive altruism (see Barclay & Willer, 2007& Roberts, 1998).

To clarify, only individuals who are elevated in status have usually acquired the capacity, resources, money, time, and influence to behave altruistically. Only wealthy people, for example, can afford to donate large sums of money. Thus, if someone behaves altruistically, this person is perceived as elevated in status. This person is more likely to be respected and even trusted.

Evolution of costly signaling theory

One of the enduring mysteries of behavior is why individuals behave altruistically (Dawes & Thaler, 1988). That is, when individuals engage in altruistic acts, they sacrifice their personal interests, like money or time. They, therefore, engage in acts that seem to reduce the likelihood they will survive or reproduce. According to the theory of natural selection, behaviors that decrease the probability that individuals will survive or reproduce should dwindle over time and eventually vanish. Thus, altruistic acts should have dissipated.

Several explanations have been proposed to explain the incidence of altruism. First, natural selection might ensure the genes of individuals, and the individuals themselves, survive and thrive. Hence, individuals might have evolved to ensure that relatives--people with similar genes--flourish, called inclusive fitness (Hamilton, 1964). They might sacrifice their personal interests to fulfill this goal. This explanation, however, implies that individuals will primarily direct altruism towards relatives.

Nevertheless, individuals often direct altruism towards people who are patently different from themselves. To explain this tendency, Trivers (1971) maintained that individuals might sacrifice their personal interests to assist their allies. They assume these allies will, eventually, return the favor. Individuals, therefore, want these allies to thrive, called reciprocal altruism.

Whereas inclusive fitness implies that altruism should be directed towards kin, reciprocal altruism implies that altruism should be directed towards allies. Yet, many studies indicate that individuals often act altruistically towards strangers (McAndrew, 2002& Van Vugt & Van Lange, 2006).

Costly signaling theory was, partly, proposed to explain altruism to strangers as well. The theory emerged from the field of behavioral ecology (e.g., Grafen, 1990), but has recently infiltrated human behavior (e.g., Griskevicius, Tybur, Sundie, Cialdini, Miller, & Kenrick, 2007& Miller, 2000, 2007& see also Zahavi, 1975).

Empirical evidence

Status motives

According to costly signaling theory, individuals might engage in altruism to demonstrate their status is elevated. If this assumption is correct, individuals should be more inclined to engage in altruistic behavior--and purchase products that preserve the environment, for example--if the need to maintain or to boost status is amplified. Griskevicius, Tybur, and Van den Bergh (2010) conducted a series of studies that verify this hypothesis.

In the first study, some participants read a short story, comprising approximately 700 words, about a college student who is seeking to ascend the corporate hierarchy, intended to highlight the importance of status. Other participants, assigned to the control condition, read a story that was similar in length but did not refer to status. In this story, the person had lost a concert ticket. Pilot testing showed the story about status does indeed increase the likelihood that individuals subsequently experience a desire for social status and a desire for prestige. Another control condition was also included: Some of the participants did not read any story.

Next, participants were granted an opportunity to decide between a pair of cars, household cleaners, and dishwashers. For each pair, the two alternatives were equivalent in price. One of the products, however, was prestigious but not designed to conserve the environment& the other product was not as prestigious, but was intended to conserve the environment. For example, the dishwasher that was designed to conserve the environment recirculated the water and was manufactured from recycled materials. Compared to the other participants, the individuals who read a story about status were more likely to purchase the products intended to preserve the environment.

If these purchases are partly intended to maintain or to boost status, individuals might be more likely to buy these responsible alternatives when their decision is reached in public than in private. That is, in public, the importance of status is amplified.

To test this possibility, Griskevicius, Tybur, and Van den Bergh (2010) conducted a second study, similar to the previous study. In this study, however, some participants imagined they needed to reach this decision in a store. Other participants imagined they reached this decision on line, in the privacy of their home. Again, when the motivation to boost status was reinforced, participants preferred the alternative that preserves the environment--but only if the decision was reached in public. This observation even extended to products that are not especially prominent, like household cleaners& only the decision to purchase, and not the usage of this product, needs to be public.

The final study replicated the first study, except the two items in each pair were not equivalent in price (Griskevicius, Tybur, & Van den Bergh, 2010). This minor adjustment generated some illuminating findings. When the motivation to boost status was reinforced, the preference towards the responsible alternative was especially pronounced if this option was more expensive. Presumably, when individuals seek to reinforce their status, they want to sacrifice even more resources to substantiate their altruism.

Nevertheless, when the motivation to boost status was not reinforced, a different pattern of results was observed. Participants were especially likely to reject the responsible alternative, especially if this option was more expensive. Arguably, these individuals are more concerned with economic rational motives, such as expenses.

Cultural observations

In some native tribes in America, tribal chiefs compete to donate as many possessions as possible. The person who donates the most possessions is regarded as highest in status (Cole & Chaikin, 1990& see also Price, 2003& Smith & Bird, 2000).

Implications of costly signaling theory

The effect of downsizing

According to costly signaling theory, acts of altruism and expenditure can be enacted to indicate elevate status and success. Conversely, acts that are intended to curb expenditure might indicate limited status and success. From this perspective, retrenchments might compromise the reputation of companies.

Zyglidopoulos (2005) confirmed this possibility. Senior executives and financial analysts evaluated the reputation of over 500 companies. That is, the quality of products, services, management, and employees was evaluated together with the level of innovation, financial viability, community responsibility, and environmental responsibility. As statistical analyses uncovered, downsizing, as defined by reductions in the number of employees by more than 5%, predicted subsequent declines in reputation, even after controlling financial performance. Selling units of a business, instead of downsizing, did not undermine reputation as markedly.

Practical implications

To encourage consumers to choose products or services that facilitate conservation, these items should not be inexpensive if decisions are usually reached in stores. Indeed, these products should be branded as prestigious and exclusive. If decisions are usually reached on line, these options should be less expensive than alternatives.

Alternative theories

Collective concerns

Some alternative theories have been proposed to explain altruism that benefits strangers. One possibility is that individuals might identify closely with some extensive collective, such as humankind or the Earth. Behaviors that facilitate strangers, thus, are not altruistic& these acts, in essence, enhance a facet of this collective self.

One example of this framework is the environmental concern perspective (e.g., Bamberg, 2003). That is, individuals might engage in activities that relate to conservation because they genuinely, perhaps intrinsically, care about the planet and its inhabitants. Thus, to promote sustainable behavior, the challenges to Earth should be underscored (see Owens, 2000).

Economic rationalism

Economic rationalism might underpin some decisions to engage in responsible, sustainable behavior--behavior that is intended to facilitate conservation of the environment (Cone & Hayes, 1980). Sustainable products, for example, might reduce the costs of fuel. Sustainable products might be easier to resell in the future, and so forth. From this perspective, to encourage responsible behavior, products merely need to save money and time. This proposition, however, disregards the need to maintain status--and hence the preference to purchase expensive items in some contexts (e.g., Griskevicius, Tybur, & Van den Bergh, 2010).

Social conformity

When individuals feel uncertain, they experience a powerful sense to conform (e.g., Hogg & Abrams, 1993& see Subjective uncertainty reduction theory). Conceivably, many attempts to behave responsibly could represent this need to comply with social norms (Nolan, Schultz, Cialdini, Goldstein, & Griskevicius, 2008& Schultz, Nolan, Cialdini, Goldstein, & Griskevicius, 2007). Patrons in hotels, for example, are especially likely to recycle towels if told that previous residents of the same room also recycle--compared to if told that previous residents of other rooms recycle (Goldstein, Cialdini, & Griskevicius, 2008).

References

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Last Update: 7/11/2016