Introduction -

In this report I intend to investigate the factors which influence our decision making in
commute selection for our daily needs and the costs associated with these decisions.
The opportunity costs and cost of satiating the need are also discussed in brief along
with the data on various time frames which will be analysed on the basis of three
different needs based conditions which are :
a) The factor of time is of utmost importance and the cost will not matter in this case
the utility value of the factor of time is more and the utility value of cost goes
down. This Case will be of the traveller who is going to miss out on his flight if he
doesn’t reach the Airport on time.
b) The factor of time and cost both have the same utility in the second case of the
daily commuter who has an option between the cab and auto rikshaw. This case
will be of the office going worker who takes the cab at a frequency of 3 - 4 times
a week.
c) The factor of cost now becomes vital and the factor of cost will take a side step.
The utility of TIme factor reduces and the cost factor increases. This will be the
third case of a Leisure customer who has indifference between the cab and auto
rikshaw.

Decision Making Heuristics -

Heuristics (also known as "mental shortcuts" or "rules of thumb") are efficient mental
processes that aid in problem solving and learning new concepts. These processes
simplify problems by ignoring some of the information that enters the brain, either
consciously or unconsciously. In their 1974 paper, Judgment under Uncertainty:
Heuristics and Biases, Tversky and Kahneman introduced three key characteristics:
representativeness, anchoring and adjustment, and availability.

Representative Heuristic -
The representativeness heuristic allows people to assess the likelihood that an object
belongs in a broad category or class based on how similar the object is to other
members of that category.

Tversky and Kahneman used the example of a person named Steve to explain the
representativeness heuristic. Steve is "very shy and withdrawn, invariably helpful, but
with little interest in people or reality." He is a meek and tidy soul with a need for order
and structure, as well as a passion for detail." What is the likelihood that Steve works in
a specific occupation (for example, a librarian or a doctor)? The researchers came to
the conclusion that when asked to judge this probability, people would base their
decision on how similar Steve appeared to the stereotype of the given occupation.
Anchoring and adjustment heuristic -
The anchoring and adjustment heuristic enables people to estimate a number by
starting with a fixed value (the "anchor") and adjusting it up or down. Different initial
values, however, result in different estimates, which are influenced by the initial value.
Tversky and Kahneman asked participants to estimate the percentage of African
countries in the UN to demonstrate the anchoring and adjustment heuristic. They
discovered that if participants were given an initial estimate as part of the question (for
example, is the real percentage higher or lower than 65 percent? ), their answers
tended to be rather close to the initial value, giving the impression that they were
"anchored" to the first value they heard.

Availability heuristic -
The availability heuristic allows people to estimate how frequently or how likely an event
will occur based on how easily that event can be remembered. For example, someone
may estimate the percentage of middle-aged people who are at risk of a heart attack by
recalling people they know who have had heart attacks. Tversky and Kahneman's
discoveries sparked the creation of the heuristics and biases research programme.
Researchers' subsequent work has introduced a number of other heuristics.

Decision Making Function -

We will define the Utility function for the factors of Time and Cost with terms defined as
follows -
F1 = Factor of utility of Time
F2 = Factor of utility of Cost
T= Time opportunity cost of lost cab
C= Opportunity cost of lost cab

The Function will be defined as follows -

F = F1*T + F2*C

Analysis -
We have calculated the values of the Utility Function in the excel and the results are
presented in the same file.
Conclusion -
We have successfully tested the model based on the heuristic to ease the decision
making and explain the real life scenario as closely as possible. The model intends to
initiate the study on the consumer behaviour which typically revolves around various
apps to check whether the availability and costs of various offerings of the product are
available.