Some potential relative advantages of performance assessment strategies over paper-and-pencil tests using short-answer and multiple-choice item formats are discussed. The major advantage of the multiple-choice test is its ability to sample a large number of learning outcomes efficiently. However, performance assessments are increasingly being used to observe concept acquisition and skill development in reading, writing, and mathematics. Performance assessments are superior to paper-and-pencil tests in their influence on learner motivation and preparation because they can be natural and normal parts of the instructional setting. Multiple-choice tests are easier to score, but performance assessments may be more content valid, inasmuch as the performance exercise is the natural goal of instruction. There is potential for the use of performance assessment to result in: (1) better integration of assessment and instruction; (2) more focus on higher level thinking skills; (3) higher motivation for engagement in instructional activities and preparatory study; and (4) enhanced instructional and content validity. The potential benefits of performance assessment may well warrant its relatively high cost. Four references are included. (SLD)