The main challenge for patients and payers is the principal–agent problem caused by the asymmetry of information on the provider's efforts. This is particularly acute in the case of quality. The agent must specify incentives for providers to deliver quality and can do so using various forms of comparative performance evaluation. A key choice is the comparator, which could be the agent's own historical performance or the historical or contemporaneous performance of other agents. In practice, payers have steadily increased their use of comparative performance evaluation. Initially this focused on appealing to intrinsic motivation. Later attempts to link comparative performance evaluation to financial incentives have highlighted the uncertainties of the evidence base.
|Title of host publication||Encyclopedia of Health Economics|
|Editors||A. J. Culyer|
|Place of Publication||San Diego, U. S. A.|
|Publication status||Published - Mar 2014|