How and why animals and humans signal reliably is a key issue in biology and social
sciences that needs to be understood to explain the evolution of communication. In
situations in which the receiver needs to differentiate between low- and high-quality
signallers, once a ruling paradigm, the Handicap Principle has claimed that honest
signals have to be costly to produce. Subsequent game theoretical models, however,
highlighted that honest signals are not necessarily costly. Honesty is maintained
by the potential cost of cheating: by the difference in the marginal benefit to marginal
cost for low versus high-quality signallers; i.e. by differential trade-offs. Owing
to the difficulties of manipulating signal costs and benefits, there is lack of empirical
tests of these predictions. We present the results of a laboratory decision-making
experiment with human participants to test the role of equilibrium signal cost and
signalling trade-offs for the development of honest communication. We found that the
trade-off manipulation had a much higher influence on the reliability of communication
than the manipulation of the equilibrium cost of signal. Contrary to the predictions
of the Handicap Principle, negative production cost promoted honesty at a very high
level in the differential trade-off condition.