Recently my wife and I went on an epic hunt to uncover everything possible about baby formula. We scoured more Web sites than I’d like to admit to and learned about all the options: powder, liquid, milk-based, soy, D.H.A.- and A.R.A.-fortified. (I’m still not clear on what A.R.A. is, exactly.) Then we learned that none of it actually matters. Since the Infant Formula Act of 1980, the F.D.A. makes sure that all formula is pretty much the same, no matter which one you buy.

Despite knowing this, I still insist on paying twice as much for Enfamil, which its maker claims is “scientifically designed.” (Aren’t they all?) I splurge because Mead Johnson is a 107-year-old company that has been promoting a single baby-formula brand for more than 50 years. I figure that it’s less likely to squander its name by skirting the rules or engaging in shoddy manufacturing than a company with less to lose. This peace of mind costs me about $7 per day.

Economists have a name for these cues that companies employ to convey their hidden strength: signaling. We see various forms of it everywhere, from the wristwatches of wealthy bankers to the nuclear arsenals of developing countries. Technology companies keep massive financial reserves to show potential competitors that they won’t back down in a fight. Why do people pay so much, in dollars and sweat, to go to a top-tier college? It might offer a superior education, but it definitely shows future employers that they are smart and willing to work hard. (Though it can also suggest that the student comes from a wealthy background. That, for some, is an even more powerful signal.) Sixty years ago, Edmund Hillary and Tenzing Norgay signaled their perseverance by climbing Mount Everest. Now, for upward of $60,000, relative amateurs can achieve the same thing, albeit with the help of state-of-the-art breathing equipment, climbing gear and a team of Sherpas.

Signaling is also often associated with consumer goods. In many ways, it was useful. How does anyone really know that they’ve picked the right baby formula, soda or car? They don’t, and manufacturers know that. That’s why our economy is filled with highly promoted branding campaigns that, however superficial or annoying, can be enormously helpful guides. In 1982, Coca-Cola demonstrated its market power with a star-studded commercial, featuring Bob Hope and Joe Namath, to introduce Diet Coke. Pepsi recently paid a fortune to hire Nicki Minaj as a spokeswoman. Even for consumers who don’t listen to her music or trust her expertise in the carbonated-beverage sector, the mere act of paying for a pop-star endorser sends a subconscious signal that their product is so successful that, well, they can afford Nicki Minaj. It also signals that the company is too heavily invested to turn out a shoddy product. For many, that’s a reason to choose the soda over the generic stuff.