The point of the diamond is to be a costly signal of commitment. In order to be a good signal, the shiny rock has to be useless. If it provided x thousand dollars of value, it would inherently be a poor signal.
Using the x thousands of dollars to do good might work as a signal if you wouldn’t have spent the money on doing good otherwise.
The point of the diamond is to be a costly signal of commitment. In order to be a good signal, the shiny rock has to be useless.
Not quite. Don’t forget that the guy gives the diamond to the girl. It becomes her property—there is a transfer of value ($) happening.
One of the signals there is “Look how large/expensive a rock I can afford” (which doesn’t require the rock to be useless) and another signal is “Look how much value I’m willing to give to you just in exchange for your goodwill and favour” (which also does not require the rock to be useless).
It’s a signal on both sides. She accepts the rock rather than telling you to give her x thousands of useful goods to show that what she wants from the process is commitment, not money.
The point of the diamond is to be a costly signal of commitment. In order to be a good signal, the shiny rock has to be useless. If it provided x thousand dollars of value, it would inherently be a poor signal.
Using the x thousands of dollars to do good might work as a signal if you wouldn’t have spent the money on doing good otherwise.
Not quite. Don’t forget that the guy gives the diamond to the girl. It becomes her property—there is a transfer of value ($) happening.
One of the signals there is “Look how large/expensive a rock I can afford” (which doesn’t require the rock to be useless) and another signal is “Look how much value I’m willing to give to you just in exchange for your goodwill and favour” (which also does not require the rock to be useless).
It’s a signal on both sides. She accepts the rock rather than telling you to give her x thousands of useful goods to show that what she wants from the process is commitment, not money.