Principal/Agent Theory and Decisionmaking in Health Care

Principal/agent theory, an economics concept that defines an agency as "a contract under which one or more persons engage another (the agent) to perform some service on their behalf which involves some decision-making authority to the agent, " is held to be to the patient/physician relationship, in contrast to the view that is a fiduciary relationship, not a contractual one. The distinction fiduciary and contractual relationships is illuminated in the process evaluating objections to the application of the principal/agent theory to patient/physician relationship. The ability of the principal/agent theory reveal important features of advance directives, understood as public rather than as confidential instructions from patient to physician, also examined. (KIE abstract)