observation-masking-zero-overhead-vs-5-7-percent-summarization

Observations (raw tool outputs) constitute 83.9% of agent tokens in typical sessions. Replacing stale tool outputs with ‘[Previous N lines elided]’ instead of summarizing them costs zero processing overhead versus 5-7% for summarization, with equivalent effectiveness. The key insight is that observations are only valuable at the moment of use — once superseded by a newer call they become noise, not signal. Summarizing noise still costs tokens.