Reforms to the Joint and Several Liability rule (JSL) are one of the most common tort reforms and have been implemented by most US states. JSL allows plaintiffs to claim full recovery from one of the defendants, even if that defendant is only partially responsible for the tort. We develop a theoretical model that shows that the efficiency of the JSL rule depends critically on both whether the care taken by potential tortfeasors is observed, and on how the actions of the potential tortfeasors interact to cause the harm. We then provide evidence that reforms of the JSL rule have been accompanied by reductions in the accidental death rate in the U. S. This result is consistent with the hypothesis that the reform of JSL causes potential tortfeasors to take more care.

This paper uses data from the 1990s to examine changes in the wages, employment, and effort of nurses in California hospitals following takeovers by large chains. The market for nurses has been described as a classic monopsony, so that one might expect increases in firm market power to be associated with declines in wages. However, we show that if one extends the monopsony model to consider effort, or if we apply a basic contracting model to the data, then we would expect to see effects on effort rather than on wages. This prediction is bourne out by the data nurses see few declines in wages following takeovers, but see increases in the number of patients per nurse, our measure of effort. We also find that these changes are similar in the largest for-profit and non-profit chains, suggesting that market forces are more more important than institutional form.