Attention as the Binding Constraint

In 1971, Herbert Simon wrote the sentence that has become more prescient with each passing decade: "A wealth of information creates a poverty of attention." Simon understood, before the smartphone and before large language models, that the scarce resource in an information-rich environment is not information but the capacity to process it. Varian built on this insight throughout his career, applying it to the specific economics of internet search, advertising, and platform markets. The advertising industry, in Varian's analysis, is fundamentally an attention market — a market in which firms compete not for money but for the few seconds of focused attention that a user devotes to any particular moment, and the price of advertising reflects the scarcity of attention relative to the abundance of messages competing for it.