We show inconsistencies in expected utility theory in a setting characterized by the possibility of under-commitment and over-commitment of resources. The setting involves the purchase of tokens, where each token buys a number of coverage minutes, and a probabilistic penalty for purchasing fewer...

One of the hallmarks of competitive interaction is each firm’s desire to differentiate from rivals. Although differentiation may be achieved through product related choices, advertising levels may constitute another key mechanism. In this paper, we examine under what conditions firms will...