Principal/agent theory and decision making in health care

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