We are to develop a model that is able to explain why and under which conditions honest gossip is viable; how and under which structural conditions it enhances cooperation and contributes to the maintenance of social order. We hope to achieve a breakthrough by combining and building on insights gained in various disciplines. Considering the problem of honesty, we will establish a straightforward connection to the theory of costly signaling in biology and economics. Biological signaling theory demonstrates the conditions under which honest signaling is viable. A general conclusion from this literature is that honest signaling and communication might be stable if signals are more expensive for cheaters or when the marginal (potential) cost of cheating is greater than the potential benefits resulting from it. Signaling theory has mainly been applied to dyadic situations that are independent from each other and from the social context. This is because contributions were primarily made by biologists and economists, while sociologists largely neglected this important topic (some notable exceptions are. We will achieve a breakthrough in signaling theory by considering that communication takes place in the social network. Therefore, our major theoretical contribution to the scientific study of gossip and reputation is twofold: (i) identification of the role of gossip and reputation in cooperation and in the maintenance of social order, (ii) the development of a micro-sociological theory of signaling that takes into account structural embeddedness.