# kaal:claim:617681-023

**Claim.** Fear of judicial bias operates through risk premiums: because investors and managers are uncertain how foreign judges will behave and may assume the worst, they price a decision to incorporate in another Member State higher.

**Type.** mechanism  **Support.** argued

**Holds when.**

- bounded rationality and incomplete information about foreign judges

**Source quote.**

> Risk premiums charged by actors often reflect both bounded rationality and incomplete information, and managers and investors thus may put a higher price on a decision to incorporate in another Member State.

**From.** Christian Kirchner, Richard W. Painter, Wulf A. Kaal, *Regulatory Competition in EU Corporate Law after Inspire Art Unbundling Delaware's Product for Euro* (2004), D.II.1 Bounded Rationality and Incomplete Information About Judicial Bias, page 29

**Cite as.** Christian Kirchner, Richard W. Painter, Wulf A. Kaal, Regulatory Competition in EU Corporate Law after Inspire Art Unbundling Delaware's Product for Euro (2004). SSRN: https://ssrn.com/abstract=617681

**Verify.** sha256 of source PDF `e142130507ea2f5b025fd97b3f762d44ee3a7aaa82b155aab63434b85e8fd834` at https://raw.githubusercontent.com/wulfkaal/Academic-Papers/main/papers/pdf/Kirchner%20et%20al.%20-%202004%20-%20Regulatory%20Competition%20in%20EU%20Corporate%20Law%20after%20Inspire%20Art%20Unbundling%20Delaware%27s%20Product%20for%20Euro.pdf

**Failure mode.** perceived-judicial-bias-premium  (family: jurisdictional-conflict)

**Topics.** risk-and-incentives

**Keywords.** judicial-bias, risk-premium, bounded-rationality, incomplete-information

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