Special thanks to Brian Farris for contributing this post.
Who should care?
Anyone who is involved in testing. Whether you are testing creatives for a marketing campaign, pricing strategies, website designs, or even pharmaceutical treatments, multi-armed bandit algorithms can help you increase the accuracy of your tests while cutting down costs and automating your process.
A typical slot machine is a device in which the player pulls a lever arm and receives rewards at some expected rate. Because the expected rate is typically negative, these machines are sometimes referred to as “one-armed bandits”. By analogy, a “multi-armed bandit” is a machine in which there are multiple lever arms to pull, each one of which may pay out at a different expected rate. Continue reading