Thefeelgoodfactor's Blog

Random thoughts

Rationality

on October 14, 2011

Couple of weeks back, I had to catch a cab to airport from college. My flight was at 5 pm and I had an exam till 1 30pm. I was wondering if I could reach airport in time if I write my exam. The problem was that it was a friday ( and the fact that it was Durga Pooja time didn’t help the cause). And then there were at least a couple of friends who said that it is very risky as took more than 3 hrs to reach airport sometimes back (and last year someone had missed a flight when he had given himself ~3 hrs for journey). On Thursday, couple of my friends went to airport and told that it took only 1.5-2 hrs to reach the place. Based on couple of instances, I tried to convince myself  that I would reach airport on time and I am not taking unnecessary risk. However, I knew the fallacy in the argument, which is somewhat similar to the black swan theory( though I understand that it would be wrong to tell me reaching late to airport would be a black swan event). For the uninitiated, the black swan theory, in a broad sense, means that just because we have not spotted a swan which is black in color in our sample doesn’t mean that there doesn’t exist a swan that is black in color. ( In my case, the fact that couple of guys took less than 3 hrs doesn’t mean I’ll reach within 3 hrs the next day). It is surprising that despite knowing that our decision is irrational, we tend to justify it.

Well, I did reach in time and was able to board the plane (Indigo Airlines) thankfully. I hadn’t traveled in Indigo Airlines before that day. My friends told me that their service is good and they always reach the destination 5 minutes before time. My immediate reaction was that the time they reported for the journey would me more compared to other airlines then. My friend refuted my point saying that it shouldn’t be possible as the time taken by various airlines is a public information. However, when I searched makemytrip website for Kolkata-Bangalore and Kolkata-Chennai routes, I found that the fastest Indigo flight would take at least 5 min more than the fastest Spicejet flight( sample query, I have taken Dec 2 for two reasons: a) I didn’t want to take a very recent date where there is a possibility of the fastest flight (maybe people have time as the most important characteristic in the utility function) being booked already. b) My term ends then, and I had to check the cost of the flight in case I go home 🙂  Now since this is a public information, the announcement that flight has reached its destination shouldn’t matter, as they have inflated the journey time already. Still, there are many who believe that Indigo always reach destination before time. Even otherwise, the expectation of flight reaching before time should have been already factored in and shouldn’t create much interest.( My personal experience with Indigo has been really bad though, my flight got delayed by 1 hr 15 min, and unfortunately I was expecting the flight to reach 5 min early, so effective delay was 1 hr 20 min ).

Another problem is that of interpretation of public information. During my internship this year, when Amma invited Modi for swearing in ceremony, I and my friend interpreted it differently. My friend thought by inviting Modi, Amma wanted to convey a message that her government is going to be as incorruptible as that of Modi’s. I thought that it was purely a political move showing her interest in all the possible alliances, inviting Sonia on one hand, and Modi on other, not to forget Mr. Naidu of third front. Now I don’t want to go into who is right or who is wrong, but the very fact that two of us interpreted the same public information differently makes an interesting case that the interpretation of the information is more important than the information per se, something which is usually ignored.

Finally, on a completely unrelated note, the vacation gave me a chance to revisit what used to be my favorite pass time: reading The Hindu. There was one particular piece of news that really caught my eyes: Denmark starts taxing fat. It would be interesting to see if this happens in India, would it have the desired impact.

Advertisements

4 responses to “Rationality

  1. Regarding your point on the flight time. I believe its a function of flight path, wind speed, traffic, earths rotation and most importantly the aircraft. While the expected flight time has to be arrived at much earlier, actual time is ex-post outcome contingent on the first factors which can’t be arrived at months in advance. I have seen a difference of 1 hr in a flight of 4.5 hrs. So ETA , to me is the best opinion of the airline contingent on above factors.

    To me what matters is the actual time the wheels start to roll, rest of the things are not completely in the control of even the Pilots and in any case it would be in their best interest to reach the destination fastest. What could one do if there’s traffic at the time of landing and aircraft is asked to go around which is a common practice at busy airports ( remember congestion surcharge over the basic fare ).

    So in this case, its just that Indigo is more conservative than its competitor which is may be closer to its philosophy of under promise and over deliver .

  2. balaji n says:

    Asif, I agree with your points completely.And there is no harm in Indigo being more conservative vis a vis their competitors. All I said/ wanted to say was, everyone should rationally realize that Indigo is more conservative compared to other airplanes regarding the journey time estimates and hence should not be positively shocked when they reach before time more often than others (as long as they reach 5 min( or the extra buffer time they had given) before the scheduled time).
    Also, I do know that for most of us price is the main criteria and not the time taken as long as it is within the reasonable limits.
    The point which I was wondering is this, Suppose there are two airlines: A and B covering the region X and on an average it takes 85 min to cover the distance ( this includes the time taken for clearance as well). Assume B is more conservative in announcing journey time and says it takes 95 min ( not more than that), but keeps its price at INR 2950 initially. A says it takes 90 min to cover the distance and charges INR 2975. ( Actually say B has undercut the price,and 25-50 Rs price differential is something we do see, and say demand is sufficiently high that both the planes have load factor of > 98%, or better 100% in this route). Now it so happens that Airlines B got delayed on 5 occasions out of 100, and was 5 min early 50% of the times and on time 45% times. If the time taken was similar for airlines A, the data would be: on time – 50% of the time, and late 50% of time. This leads to Airline B winning TOI award for best on time services (blah blah).
    Now say the demand starts to reduce slightly, airlines B increases its price to 3010 INR. (And airlines A keeps at the same level). But airlines B advertises that it has reached on time 95% of the time compared to airlines A which has got delayed 50% of the time. ( without mentioning the time ever). Rationally, I would expect people to prefer A over B as the price is cheaper and the time taken is the same (after all, this is a public information and anyone can check the past records,hopefully) . But do you really think that will happen? I am not so sure.

  3. Ajay says:

    @ Bala: Is it correct to relate and compare an issue like flight times (objective information) and political tactics (subjective information) though both of them are publicly available information ?

    • balaji n says:

      Ajay, I am not sure if I have understood your point correctly. All I am saying is in the scenario I described, in a rational world people should see through B’s plan and should prefer A over B as it is providing the same service ( in terms of time taken) at a lower cost. But in reality that might not be the case. In case you are pointing to the bounded rationality concept when you say political tactics, I do agree with you that it becomes difficult to say that people are not rational. But then that was something which I mentioned in the original post, when I said interpretation of public information is more important than the information per se.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: