The typology of security commitments presented in the previous chapter shows that leaders make different kinds of promises to allies. The variety of commitments formed in practice suggests that a number of factors, in addition to simple defense, motivate decisions about how to design commitments. One such factor is moral hazard, which is an incentive problem that occurs when an actor is emboldened to behave aggressively because it is insulated from the risks of its own actions. An alliance pledging to provide military assistance to an alliance member may deter a prospective adversary from attacking the member, but that same commitment might also embolden the leader of the protected state to take actions that risk provoking the adversary and causing violent conflict, because it knows that the cost of its defense will be shared with its allies. Failing to balance deterrence and the risks of moral hazard can actually lead to the very outcome the third party hoped to prevent. How can the third party resolve this dilemma and design a security commitment that achieves both objectives? In this chapter and in Chapter 5, I develop a contract theory of alliance commitments that explains why a third party's intervention in an international crisis might affect disputants’ behavior and how the third party's anticipation of this behavior shapes its choice of the types of promises to make.