Costless Versus Costly Signaling Theory and Evidence from Share Form

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♪ [music] ♪ - [Professor Tyler] So how did the Korean Hyundai become such an excellent car, and earn so much success in the marketplace? Well, let's go back in time. In 1986, the first Hyundai Excel was sold in the United States. It was not entirely attractive, but it was inexpensive. The problem though was that it just didn't work that well. So Hyundais quickly developed a reputation for being lower quality cars, and in time, they became the butt of jokes among American consumers. Jay Leno, who was at that time was host of the Tonight Show said that you could double the value of your Hyundai by filling it up with gas. Hyundai wanted to flip this reputation and compete with the more successful companies, such as Honda and Toyota, and they managed. Hyundai decided they would invest in new advanced factories, in worker training, and in quality control. This, in turn, would result in much higher quality cars. But how could Hyundai convince consumers of this new higher quality -