The pigments responsible are psittacofulvins, a class of colourant unique to parrots and unrelated to the carotenoids that redden most other birds. In budgerigars, these pigments in the crown and cheek absorb ultraviolet and re-emit it as visible yellow-green light, a genuine fluorescence rather than simple reflectance.
Kathryn Arnold and colleagues reported in 2002 that budgerigars preferred mates whose fluorescence was intact. Applying a UV-blocking sunscreen to the plumage of one bird, while smearing a control bird with a chemically similar preparation that did not block UV, shifted choice away from the masked bird. Budgerigars have four cone types including a UV-sensitive one, so the signal is within their visual range.
The finding is sometimes generalised into a claim that all parrots signal by fluorescence. That is not established. Fluorescent plumage is widespread among parrots, but its role in mate choice has been tested in very few species.