Previous research suggests that many firms 'over - invest' in advertising - meaning spend beyond a point where advertising positively affects a firm's bottom line (if interested see here: Advertising Effectiveness). Game Theory can explain some of this, but not all. 

What else can explain why many firms over invest in advertising? 

Are there are any reasons for firms to advertise beyond wanting to increase profits? 

Note: two recent 

Freakonomics on this topic can be found here: https://freakonomics.com/podcast/advertising-part-1 and https://freakonomics.com/podcast/advertising-part-2 

Answer rating: 100% (QA)

Several factors beyond Game Theory can contribute to firms overinvesting in advertising and reasons for advertising beyond solely profit motives Compe... View the full answer