Laughter and humor are pervasive phenomena in conversational interactions. This paper argues that they function as displays of mind-reading abilities in social interactions-as suggested by the Analogical Peacock Hypothesis (APH). In this view, they are both social bonding signals and can elevate one's social status. The relational combination of concepts in humor is addressed. However, it is in the inclusion of context and receiver knowledge, required by the APH view, that it contributes the most to existing theories. Taboo and offensive humor are addressed in terms of costly signaling, and implications for human computer interaction and some possible routes to solutions are suggested.
