Behavioural Economics - What are Commitment Contracts?

This short video looks at the nature of commitment contracts as a way of encouraging people to follow through with behaviours that might improve their health or other aspects of their lives. We often use commitment devices to voluntarily ‘lock ourselves’ into doing something in advance. The social nature of these commitments is often crucial.

Commitment contracts are often used as a way to help people achieve personal or professional goals that may be difficult to accomplish on their own. They can provide motivation, accountability, and a sense of personal responsibility to help people stay on track and reach their goals.

Here are a few examples of commitment contracts:

• Saving for retirement: A person may make a commitment contract to save a certain amount of money each month for retirement, and agree to have a certain amount of money withheld from their paycheck each month. If the person fails to save the agreed-upon amount, they may be required to pay a penalty.
• Weight loss: A person may make a commitment contract to lose a certain amount of weight, and agree to pay a penalty if they fail to reach their weight loss goal.
• Exercise: A person may make a commitment contract to exercise a certain number of times per week, and agree to pay a penalty if they fail to meet their exercise goal.
• Smoking cessation: A person may make a commitment contract to quit smoking, and agree to pay a penalty if they fail to remain smoke-free.
• Professional development: An employee may make a commitment contract to complete a certain amount of professional development or training, and agree to pay a penalty if they fail to meet their goal.