Now listen to part of a lecture from a business class.
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 are considering spending that much money on a piece of jewelry, they want to make sure it's authentic, that the gold is real, 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 in 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 the 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.
Explain how the example used in the lecture illustrates the concept of signaling.
In the passage, the writer mentions a notion called signaling. This concept means the seller of some expensive product will find a way to make his customers believe that his product is high quality and finally buy it. Usually the seller will invite a not-involved party to give unbiased judgment. In the lecture, the man takes a jewelry store as an example. The owner of this store sells authentic watches or rings which are composed of real gold or diamond. So the price is expensive. However, most of people who walk into the store can’t tell these authentic things from fake ones. So the owner invites an expert of 20 years’ experience to certify that these products are real and writes this on a sign. People who read this sign will believe the expert’s words because he is not involved in the sale. Finally they will probably buy some jewelry.
