  From skipped exercise classes to last-minute cancellation of dentist
appointments, underutilization of reserved resources abounds. Likely reasons
include uncertainty about the future, further exacerbated by present bias. In
this paper, we unite resource allocation and commitment devices through the
design of contingent payment mechanisms, and propose the two-bid
penalty-bidding mechanism. This extends an earlier mechanism proposed by Ma et
al. (2019), assigning the resources based on willingness to accept a no-show
penalty, while also allowing each participant to increase her own penalty in
order to counter present bias. We establish a simple dominant strategy
equilibrium, regardless of an agent's level of present bias or degree of
"sophistication". Via simulations, we show that the proposed mechanism
substantially improves utilization and achieves higher welfare and better
equity in comparison with mechanisms used in practice and mechanisms that
optimize welfare in the absence of present bias.
