Health economists typically use agency theory to predict how physicians respond to various policy schemes. Empirical studies show that many schemes lead to unintended responses, indicating that current theoretical models fail to fully explain physicians’ behaviour. Drawing on key lessons from...

In many health care systems payers reward physicians for reaching predetermined performance targets. These targets may be based on measures for which own performance is difficult to predict. This paper uses a principal-agent model to analyse physicians' response to a target-based performance...