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  • Signalling (Economics)

Credible Signal

A credible signal is a piece of information conveyed by an informed party that an uninformed party can believe to be true. In signalling theory, credibility is achieved when the signal is structured in such a way that it is not in the best interest of a low-quality or dishonest sender to produce it. This is typically achieved through a cost mechanism, where the cost of falsely signalling is greater than the potential benefit.

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  • An online education platform wants to convince prospective students that its expensive data science program is of a much higher quality than cheaper alternatives, leading to real job placements. Which of the following actions would serve as the most credible signal of the program's quality?