[proofplan]
We prove multiplicativity by expressing each permutation as a product of transpositions. The key input is that the signature of a permutation is $(-1)^m$ whenever the permutation is written as a product of $m$ transpositions, so concatenating two transposition decompositions adds the exponents. This gives $\operatorname{sgn}(\sigma\pi)=(-1)^{m+\ell}=(-1)^m(-1)^\ell=\operatorname{sgn}(\sigma)\operatorname{sgn}(\pi)$ for arbitrary $\sigma,\pi\in S_n$.
[/proofplan]
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[step:Choose transposition decompositions for the two permutations]Let $\sigma,\pi\in S_n$ be arbitrary. We use the standard fact that every element of $S_n$ is a product of transpositions. Thus there exist integers $m,\ell\ge 0$ and transpositions $\tau_1,\dots,\tau_m,\rho_1,\dots,\rho_\ell\in S_n$ such that
\begin{align*}
\sigma=\tau_1\tau_2\cdots\tau_m
\end{align*}
and
\begin{align*}
\pi=\rho_1\rho_2\cdots\rho_\ell.
\end{align*}
When $m=0$ or $\ell=0$, the corresponding product is the empty product, hence the identity permutation in $S_n$.[/step]
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[guided]Fix arbitrary permutations $\sigma,\pi\in S_n$. The goal is to compare the signature of the product $\sigma\pi$ with the separate signatures of $\sigma$ and $\pi$. Since the signature is controlled by transposition decompositions, we first write both permutations in that form.
Every element of $S_n$ can be written as a product of transpositions. Therefore there are integers $m,\ell\ge 0$ and transpositions $\tau_1,\dots,\tau_m,\rho_1,\dots,\rho_\ell\in S_n$ satisfying
\begin{align*}
\sigma=\tau_1\tau_2\cdots\tau_m
\end{align*}
and
\begin{align*}
\pi=\rho_1\rho_2\cdots\rho_\ell.
\end{align*}
The cases $m=0$ and $\ell=0$ are included: an empty product denotes the identity element of $S_n$. This convention is necessary because the identity permutation has no required transpositions in its shortest decomposition, and the homomorphism identity must also hold when one of $\sigma$ or $\pi$ is the identity.[/guided]
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[step:Concatenate the decompositions to express the product]Using associativity of composition in the group $S_n$, the product $\sigma\pi$ has the [transposition decomposition](/theorems/777)
\begin{align*}
\sigma\pi=(\tau_1\tau_2\cdots\tau_m)(\rho_1\rho_2\cdots\rho_\ell).
\end{align*}
Thus $\sigma\pi$ is expressed as a product of $m+\ell$ transpositions, namely $\tau_1,\dots,\tau_m,\rho_1,\dots,\rho_\ell$ in that order.[/step]
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[guided]The group operation in $S_n$ is composition of permutations, and composition is associative. Therefore, after choosing the decompositions
\begin{align*}
\sigma=\tau_1\tau_2\cdots\tau_m
\end{align*}
and
\begin{align*}
\pi=\rho_1\rho_2\cdots\rho_\ell,
\end{align*}
their product is
\begin{align*}
\sigma\pi=(\tau_1\tau_2\cdots\tau_m)(\rho_1\rho_2\cdots\rho_\ell).
\end{align*}
This is already a product of transpositions: the first $m$ factors are $\tau_1,\dots,\tau_m$, and the next $\ell$ factors are $\rho_1,\dots,\rho_\ell$. Hence the total number of transpositions in the displayed decomposition of $\sigma\pi$ is $m+\ell$. The order matters because multiplication in $S_n$ is generally not commutative, so we keep the factors exactly in the order coming from $\sigma$ followed by $\pi$.[/guided]
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[step:Apply the transposition decomposition formula for signature]The theorem [Signature from Transposition Decompositions](/theorems/7876) [citetheorem:7876] says that if a permutation in $S_n$ is written as a product of $r$ transpositions, then its signature is $(-1)^r$. Applying this result with $r=m$ to the displayed decomposition of $\sigma$ gives
\begin{align*}
\operatorname{sgn}(\sigma)=(-1)^m.
\end{align*}
Applying the same result with $r=\ell$ to the displayed decomposition of $\pi$ gives
\begin{align*}
\operatorname{sgn}(\pi)=(-1)^\ell.
\end{align*}
Applying it with $r=m+\ell$ to the concatenated decomposition of $\sigma\pi$ gives
\begin{align*}
\operatorname{sgn}(\sigma\pi)=(-1)^{m+\ell}.
\end{align*}[/step]
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[guided]We now use the precise external input on which the proof rests: Signature from Transposition Decompositions [citetheorem:7876]. Its hypothesis is that a permutation in $S_n$ has been expressed as a product of transpositions, and its conclusion is that the signature of that permutation equals $(-1)^r$, where $r$ is the number of transpositions in the chosen expression.
For $\sigma$, the hypothesis is satisfied by the decomposition
\begin{align*}
\sigma=\tau_1\tau_2\cdots\tau_m,
\end{align*}
where each $\tau_i$ is a transposition in $S_n$. Therefore the theorem gives
\begin{align*}
\operatorname{sgn}(\sigma)=(-1)^m.
\end{align*}
For $\pi$, the hypothesis is satisfied by the decomposition
\begin{align*}
\pi=\rho_1\rho_2\cdots\rho_\ell,
\end{align*}
where each $\rho_j$ is a transposition in $S_n$. Therefore
\begin{align*}
\operatorname{sgn}(\pi)=(-1)^\ell.
\end{align*}
Finally, the previous step showed that $\sigma\pi$ has a decomposition into $m+\ell$ transpositions, namely $\tau_1,\dots,\tau_m,\rho_1,\dots,\rho_\ell$. Applying the same theorem one more time gives
\begin{align*}
\operatorname{sgn}(\sigma\pi)=(-1)^{m+\ell}.
\end{align*}
This is the point where the well-definedness of the parity in a transposition decomposition is being used: the theorem guarantees that these values of the signature do not depend on the particular decompositions chosen.[/guided]
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[step:Identify the product of signatures]Since integer powers of $-1$ satisfy $(-1)^{m+\ell}=(-1)^m(-1)^\ell$, we obtain
\begin{align*}
\operatorname{sgn}(\sigma\pi)=(-1)^{m+\ell}.
\end{align*}
Substituting the three identities from the preceding step gives
\begin{align*}
\operatorname{sgn}(\sigma\pi)=\operatorname{sgn}(\sigma)\operatorname{sgn}(\pi).
\end{align*}
Because $\sigma,\pi\in S_n$ were arbitrary, the map
\begin{align*}
\operatorname{sgn}:S_n\to\{1,-1\}
\end{align*}
preserves multiplication. Hence $\operatorname{sgn}$ is a [group homomorphism](/page/Group%20Homomorphism) from $S_n$ to the multiplicative group $\{1,-1\}$.[/step]
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[guided]The three identities obtained from the transposition decomposition formula are
\begin{align*}
\operatorname{sgn}(\sigma)=(-1)^m,
\end{align*}
\begin{align*}
\operatorname{sgn}(\pi)=(-1)^\ell,
\end{align*}
and
\begin{align*}
\operatorname{sgn}(\sigma\pi)=(-1)^{m+\ell}.
\end{align*}
The remaining step is arithmetic in the multiplicative group $\{1,-1\}$. Since exponent laws for integer powers give
\begin{align*}
(-1)^{m+\ell}=(-1)^m(-1)^\ell,
\end{align*}
we substitute the first two displayed identities into the right-hand side and the third displayed identity into the left-hand side. This yields
\begin{align*}
\operatorname{sgn}(\sigma\pi)=\operatorname{sgn}(\sigma)\operatorname{sgn}(\pi).
\end{align*}
The permutations $\sigma$ and $\pi$ were chosen arbitrarily in $S_n$, so this equality holds for every pair of elements of $S_n$. Therefore the map
\begin{align*}
\operatorname{sgn}:S_n\to\{1,-1\}
\end{align*}
preserves the group operation. Since $\{1,-1\}$ is equipped with multiplication, this is exactly the assertion that $\operatorname{sgn}$ is a group homomorphism from $S_n$ to $\{1,-1\}$.[/guided]