Accidental death and the rule of joint and several liability

Authors


  • The National Science Foundation and the Russell Sage Foundation provided financial support for this research. We also thank Ellen Bublick, Dan Dobbs, Lewis Kornhauser, Scott Masten, Suzanne Scotchmer, Kathryn Spier, Timothy Wang, and seminar participants at the American Law and Economics Association 2009 Annual Meeting in San Diego, California, the Michigan Law School Law and Economics Workshop, the NBER Summer Institute 2010 in Cambridge, Massachusetts, Berkeley Law School, and Vanderbilt Law School for helpful comments and support of this research. We are grateful to Elliott Ash for excellent research assistance.

Abstract

Most U.S. states have enacted JSL reform, the move from a regime of joint and several liability (JSL) that allows plaintiffs to claim full recovery from any one of multiple defendants to one where defendants are held liable only for the harm they cause. Contrary to previous theoretical work, we show that JSL reform can increase precaution by judgment proof agent by giving “deep pockets” an incentive to reduce their own liability by bringing judgment-proof agents into court. This result can help explain our empirical findings showing that JSL reform reduces death rates (and hence increase precaution) for many types of accidents. Together, these results highlight the role that litigation costs and judgment-proof agents play in the functioning of the American tort system.

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