Incentives matter (part 3):

Incentives matter (part 2):

A Yale economics professor and a Yale law school professor are hoping that the next diet trend to take off is their own, which involves getting dieters to sign binding contracts committing to pay significant sums of money if they fail to meet their weight-loss goals.

The economist, Dean Karlan, tested the method himself, promising to hand over $1,000 to a friend every week that he didn't drop one pound. Soon enough, he lost 10 pounds, getting down to 170 pounds without paying a cent.

Now, Mr. Karlan and Ian Ayres, the law professor who also teaches at Yale's school of management, are launching a company based on this strategy. StickK will officially open next month, just in time for New Years' resolutions aimed at losing pounds gained at holiday parties and family feasts. The company will have a Web site offering individuals hoping to reach a goal — anything from sticking to a diet to learning to ride a unicycle — legally binding contracts where they will pay a set dollar amount to charity if they fail in their endeavor.

[Full article here.]

Incentives matter: This Hellend and Tabarrok paper argues that commercial bail and bounty hunters work well in forcing defendants to appear in court and in recapturing them if they do fail to appear compared to those released on their own recognizance or on a public bail system.

Invisible Heart readers will find this story from Dani Rodrik's weblog of interest.