The doctor-patient relationship has been the main focus of principal-agent theory in health care. This paper focuses on communication between doctors and patients within the doctor-patient relationship as a method by which the utility of the principal (patient) can be maximised. Patients' preferences for various attributes of the doctor-patient relationship are examined using a discrete choice experiment. Individuals were presented with pairs of hypothetical scenarios describing GP visits that differed depending on the attributes of the doctor-patient relationship. In the time-constrained GP consultation, the results show that being able to talk to the doctor is the most important attribute, followed by patients' understanding of the doctor's explanations, waiting time for an appointment, and the amount of information transferred to the patient. Quality of information is more important than its quantity. The extent to which patients were involved in decision making had no influence on the choice of visit, although it was important to patients who were relatively young and female. Policies aimed at involving patients in decision making should be targeted at specific groups of patients only. The results have implications for the training of doctors in communication skills as a response to market failure caused by asymmetry of information.Ã University of Aberdeen ÃÃ Queen Margaret College, Edinburgh and health, the absence of an explicit contract between doctor and patient, combined with the absence of extensive competition between GPs for patients, leaves patients in a potentially weak position. Only recently, however, have attempts been made to examine the nature of this agency relationship in any detail (Mooney, 1992;Mooney and Ryan, 1993;Ryan, 1994).The main policy responses to this type of market failure have concentrated on the licensure of doctors to`protect' vulnerable consumers and on designing financial incentives for doctors to reduce the possibility of supplier-induced demand (Arrow, 1963;Evans, 1984;Labelle et al., 1994). It is suggested, however, that although these policies are important, they deal with the symptoms of this type of market failure (i.e. consumer vulnerability and supplier-induced demand) rather than its source: that is, an imbalance of information in the doctor-patient relationship.The role of information transmission in market transactions has generally been ignored in the principal-agent literature. In many applications, and not just health care, relationships between buyers and sellers are characterised by trust, communication and are of a long term nature (Casson and Wadeson, 1997). The emphasis is on co-operation rather than the self-interested bargaining that is apparent in principal-agent theory and Coasian models of the firm. Because of this, explicit information transmission (rather than neoclassical competition) plays a central role in meeting the objectives of the principal at minimum cost. For example, in health care there is evidence suggesting that the nature of the docto...