Commitment Devices

We review the recent evidence on commitment devices and discuss how this evidence relates to theoretical questions about the demand for, and effectiveness of, commitment. Several important distinctions emerge. First, we distinguish between what we call hard and soft commitments and identify how soft commitments, in particular, can help with various dilemmas, both in explaining empirical behavior and in designing effective commitment devices. Second, we highlight the importance of certain modeling assumptions in predicting when commitment devices will be demanded and examine the laboratory and field evidence on the demand for commitment devices. Third, we present the evidence on both informal and formal commitment devices, and we conclude with a discussion of policy implications, including sin taxes, consumer protection, and commitment device design.