Question

Feasts and banquets are an important part of many cultures around the world. For

example, in Norse culture during the Viking era in Scandinavia, chiefs and other rulers

would routinely throw lavish feasts for all of their vassals (people who owed them a duty

of responsibility), including rivals and enemies. From a naive point of view, it seems

strange to feast and give gifts to people who will likely use those gifts against you.

(a) (10 points) Using the economic idea of costly signaling, explain how such a custom

could emerge.

(b) (5 points) Describe how this custom could become embedded in culture, long after

its original signalling purpose was lost, referring to the concepts developed in class,

and your own thoughts.

Answer 1

Answer) Following are the answers to 2 given subparts

1. Before answering this part,it is important to understand what we mean by costly signaling,it implies the idea that to show strength,people/firms do arbitary useless things which may not be relevent to business at times,consider this a lot of businesses throw launch party,where they invite their rivals/competitors as well,one would wonder why they would let their competitors know about their new products and give them a party about it,but the idea is to signal strength,to give a signal to all the players and market that they are a serious player,after this example it is clear why and how such a custom could emerge,a show of strength,no matter how useless it may seem,but for rulers or chiefs throwing it was a signal of their domination and how everyone should keep in mind their power.
2. Though the original purpose was lost or became less significant,the idea of strength display never faded,in different culture,different ways of power display right from individuals to firms to countries continue,for example consider nations testing missiles,showcasing the world that they have enough power or firms giving its employees bonuses showcasing its financial stability,the idea that you have to look powerful is passed on and it is still present everywhere.

Answer is complete.Thank you!