Investor Behavioral Anomalies in Wartime Uncertainty: The Case of North Kivu in DRC

Abstract

After combining the CPT1, SARF2, and greed and grievances dynamical systems, and the overreactions models, we conducted a questionnaire survey with a sample of 921 investors from North Kivu in the DRC, of which 879 (95%) were in the service sector. The evaluation of the risk taken by investors is carried out at two levels. At the first level, it is assessed according to an informational asymmetry focused on estimating probabilities describing the outlook for results over three years (from 2014 to 2016). At the second level, the analysis describes the investors’ attitude regarding their level of profit expectation as an endogenous variable of heuristic optimization, cognitive bias, and self-expressive bias. The results show that the anomalies described in the interactive behavior of N-K investors during wartime uncertainty stem from a plurality of attitudes reflecting an ambiguity of choices dominated by a sub-reaction at the base of reluctance and a loss of opportunity in the market.