Abstract: We investigate a burgeoning market selling commitment contracts that help individuals solve self-control problems by increasing their cost of non-compliance with a personal goal. If it is always desirable to invest in the goal, the optimal contracts achieve the first best, even if the buyer's self-control ability is unobservable. Otherwise, incomplete information leads to a second-best separating equilibrium where the seller distorts the commitment contract for buyers with weak self-control, resulting in over-investment. Although the seller's collection of penalty payment upon non- compliance sounds "exploitative", mandating sellers to use non-monetary penalty or to transfer penalty payments to third parties reduces welfare.

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