Why do people often continue choosing familiar brands and options even when better alternatives might exist? A recent study co-authored by an Illinois Institute of Technology researcher examines the decision-making processes that shape when people remain with what they know and when they choose to explore something new. The research highlights how individuals weigh immediate rewards against the potential benefits of trying unfamiliar options, offering insights into consumer behaviour, technology adoption, and innovation.

Stanton Hudja, assistant professor of business analytics and strategy at the Stuart School of Business at Illinois Institute of Technology, studies how people make everyday choices, such as selecting a new grocery brand or adopting emerging technology. His paper, Strategies in the Multi-Armed Bandit, published in Experimental Economics and co-authored with Daniel Woods of Macquarie Business School, explores how individuals weigh the risks of experimentation against the reliability of familiar choices.

To study this behaviour, the researchers used the classic multi-armed bandit problem, an experimental scenario in which participants repeatedly choose between several slot machines, each offering different potential payouts. Participants had to decide whether to continue selecting machines that previously delivered good outcomes or test new machines that might produce higher rewards. By analysing these decisions, the researchers compared different strategy models and refined them to represent better how people balance exploration with short-term gains.

The findings suggest that many people avoid new brands or technologies because uncertainty discourages experimentation. Individuals often undervalue the long-term benefits of gathering information about unfamiliar options, since doing so requires effort and does not guarantee immediate rewards. Understanding these patterns could help businesses, policymakers, and innovators design approaches that encourage people to experiment with new products, services, and ideas, potentially leading to broader economic and social benefits.

More information: Stanton Hudja et al, Strategies in the multi-armed bandit, Experimental Economics. DOI: 10.1017/eec.2025.10027

Journal information: Experimental Economics Provided by Illinois Institute of Technology