This essay reviews the influence that research on psychological processes in clinical reasoning has had upon the characteristics and formats of licensing examinations such as the new United States Medical Licensing Examination (USMLE) and its predecessors, emphasizes the implications of such research for the assessment of clinical competence at all levels of medical education, and proposes a challenging new direction for educational research that could make clinical assessment more effective. Specifically, (1) factors are discussed that support the continued judicious use of multiple-choice questions (MCQs); and (2) emphasis is given to the need to assess the clinician's ability to analyze controversial clinical situations, where no single answer is agreed upon as “most nearly correct,” for even though essay questions and oral examinations are better suited than MCQs to assess such questions, they have been replaced by MCQs largely because of problems of consistency in grading, breadth of domain sampling, and cost. Because of these limits on essays and oral examinations, a program of educational research is advocated to develop a test format that can effectively assess the clinician's abilities to deliberate among alternatives, to recognize the role of values and preferences in decisions, and to weigh risks and benefits. Just how much this new tool could be used for national certification and licensing examinations would have to be determined, but it is important that some component be included to signal to educators and new physicians that medical practice is, at least in part, concerned with matters for which final answers are not available.