Episode 2: Handicap Signaling in the Business World
The handicap principle offers an explanation for the emergence of unusual traits found in certain animals. For instance, the peacock's tail would appear to be detrimental to the survivability of the peacock in the wild. The colorful tail certainly plays a role in sexual selection, but it will also attract the unwanted attention of predators. According to the handicap principle, nature can parlay these "handicaps" into signals about the animal's quality and worth. Businesses also use handicap style signaling in order to convey information about their competitive advantages. So what does a peacock's tail have in common with Tesla's decision to make their rechargeable battery IP available to competitors? Tune into my discussion with Professor Ryan Krause, a business professor at Texas Christian University, to find out.
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