Market efficiency fails once attention becomes scarce, requiring corrective intervention

Evidence

In an information-poor economy with no scarcity of attention, efficiency is achieved under laissez-faire. Intervention is required in the information-rich economy. […] Whereas in the information-poor economy decentralized competition for attention and money leads to an efficient equilibrium, in an information-rich economy the decentralized equilibrium is inefficient. The reason is that there is wasteful competition for scarce attention. An efficient solution can be implemented by imposing a linear tax on attention-seeking activities and distributing the raised revenue to the buyers. — Yves Citton, The Ecology of Attention, 177

Categorization

• SEED: Essay angle: an orthodox economist’s own framework, taken seriously on attention, licenses Pigouvian taxation of advertising—the hidden radicalism inside neoclassical economics.
• XREF: Echoes Milgrom’s trade-institutions argument: when a key resource (reputation, attention) becomes costly to verify, decentralized equilibria break down and institutions/interventions substitute. — connects to: Market mechanisms sometimes amplify rather than correct human cognitive limitations — Donald MacKenzie, An Engine, Not a Camera: How Financial…, 1207; Attentional tasks fail when capacity cannot meet their demands; The attention economy treats attention as uniform when its quality is secretly variable — Jenny Odell, How to Do Nothing: Resisting the…, 345 (+5 more)

Broader Connections

• Market mechanisms sometimes amplify rather than correct human cognitive limitations #corroborates (0.85) — Donald MacKenzie, An Engine, Not a Camera, 1207
• Market actions based on efficient-market models can create anomalies those models cannot explain #corroborates (0.80) — Donald MacKenzie, An Engine, Not a Camera, 1166
• Using a model can make markets conform less well to it. #corroborates (0.80) — Donald MacKenzie, An Engine, Not a Camera, 92
• Attentional tasks fail when capacity cannot meet their demands #complicates (0.75)
• The attention economy treats attention as uniform when its quality is secretly variable #expands (0.75) — Jenny Odell, How to Do Nothing, 345
• Efficient-market theory struggles more to explain sudden rises than crashes #expands (0.75) — Donald MacKenzie, An Engine, Not a Camera, 861
• Attention scarcity can be turned into an asset through redistributed attention #qualifies (0.70) — Yves Citton, The Ecology of Attention, 337