Andreas Hefti
(Zurich University)
will give a presentation on
From Information Overload to Market Polarization: The Role of Competitive Attention in Shaping Market Superstars
Abstract: This paper introduces a stylized model of competitive attention that addresses how firms vie for consumer attention in markets where individuals have limited information-processing capacities. Building on Steven's Law of Perception, we show how firms' competition for attention shapes market concentration, the formation of consideration sets, and the overall structure of markets. The model offers a theoretical framework to explain phenomena such as the Paradox of Choice, the dominance of "superstar" firms, and the emergence of Power Law distributions in market data like sales and advertising. It also challenges the traditional Long Tail theory by showing that larger markets may not benefit less popular products. Instead, the competitive dynamics of attention favor the concentration of market power in the hands of a few dominant players, suggesting a pathway for future empirical investigations into digital and attention-driven economies.