What is... | December 11, 2012

What is a commitment device?

This situation may be familiar: in the morning we vow that at dinner we will order salad. But once in the restaurant the smell of burgers and fries is too good to resist.

Or we proclaim that this month we won’t spend on anything but essentials, only to buckle when we see that killer pair of shoes or the latest gadget in the shop window. This is where commitment devices can come in.
A commitment device usually refers to a self-imposed arrangement that helps a person stick to a commitment they have made and would like to keep.

Temptation – it’s officially hard to resist
Numerous academics have modeled this internal tension or temptation which makes it so hard to stick to a commitment. Professor Max Bazerman and colleagues describe the challenge as the “want/should conflict”. We have competing internal preferences; what we think we should do, usually to gain some long-term benefit, is not necessarily what we want to do right now.

Commit with constraints
Commitment devices can work in different ways.
One way is by constraining future choices. Freezing a credit card in a block of ice is one example, as is making contributions to illiquid pensions or a setting up a direct debit into a restricted-access savings account. In each case, we have less opportunity to spend, which makes it easier to resist temptation. Patricia Sourdin of Adelaide University found that people who are aware that they have impulsive tendencies use pension (superannuation) contributions as a commitment device to improve their savings.

Commit with rewards or penalties
Another way that commitment devices can work is through financial or psychological incentives to stick to the goal. In the United States, Gharad Bryan, Dean Karlan and Scott Nelson make a distinction between hard and soft commitment devices: if the incentives (rewards or avoidance of costs) are primarily financial, it is called a hard device; if they are mostly psychological, it is soft. But some commitment devices can call on both.
The online platform StickK allows people to set both financial and reputational stakes on their commitments. As StickK co-founder Ian Ayres of Yale University says, the risk of losing the stakes serves to “increase the price of vice”. Registered users of the site set a goal, nominate a referee who will verify their progress, and select a group of supporters who will find out if they have stuck to their commitments. Having a referee and a group of supporters makes it harder to cheat and means the users will lose face if they fall behind. And, to really up the stakes, users can also choose to put money on the line. Credit card details are taken upfront, but money is only charged to the account if the commitment is broken. Some people even choose to send their forfeit money to a charity whose values they do not support – just to make it all the more painful if they fall off track.

Commit with friends
Peer support is another commitment mechanism. In 2012, research found that social groups can act as a commitment device to increase household savings. Surprisingly, text messages worked nearly as well as the in-person support groups and had longer lasting effects, suggesting that beyond moral support or reputational gains, simply being prompted to be mindful of the goal can be an important component of sticking to a commitment.
Whether they restrict your options, make it more painful to fail, provide moral support or keep you from forgetting about your goal, commitment devices can be a valuable tool to help change behavior.

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Nathalie Spencer
Nathalie Spencer

Behavioural scientist at ING