The behavior of street vendors in the informal sector in relation to decision making as rational agents

Nolenis Mendoza Bolivar, Yuli Toro Cardenas and Alexandra Mosquera Trujillo

Management (Montevideo), 2024, vol. 2, 33

Abstract: The behavior of a street vendor in the informal sector regarding decision making as rational agents can be understood through a stochastic model that explains their behavior. In this model, the street vendor has subsistence consumption subject to two constraints: the first considers an uncertain income and the second consists of his consumption routine. Past consumption influences future consumption, which is an important part of this seller's decision making as a rational agent. In addition, the optimal proportion of income for savings is determined when the individual has a surplus, the hours dedicated to his activity and the optimal future consumption strategy. This approach shows how street vendors in the informal sector make rational decisions in an environment of uncertain income and consumption routines.

Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:dbk:manage:v:2:y:2024:i::p:33:id:1062486agma202433

DOI: 10.62486/agma202433

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