Signaling Theory
Signaling Theory explains how credible communication occurs when information is asymmetric — when one party knows something the other doesn't. Because cheap talk is cheap (anyone can claim anything), credible signals must be costly to fake. College degrees signal ability partly through their cost; luxury goods signal wealth; warranties signal product quality; corporate offices signal permanence. The signal's credibility depends on its cost being higher for low-quality mimics than for high-quality genuines.