PREMIUM Team 2016

By January 25, 2016BlogPost, PREMIUM


Creating A Human Economy In A Jar: A PREMIUM/PENDO Experiment

Building community is not an easy task. That’s why it takes excellent students to get it done. Make Erkelenz, Lisette Bannies, Laura Bosch Ferrete and Audrey Hobbelen will work in the upcoming five month together with Pendo. Their assignment is to start their own community on Pendo and investigate the effects of Pendo on members level of self-confidence, financial security and overall well-being.

Pendo means many things to many people. As a financial instrument it allows individuals to do what Banks do. Rather than issue commercial paper or seek short-term loans from banks, participants create their own credit lines. To illustrate the point here: When a transaction takes place in a mutual-credit system, the account of the buyer is debited and the account of the seller is credited by the agreed-upon sales price—whether or not the buyer has a positive account balance. For example, say I mow your lawn for an agreed price of twenty credits. If we both started at zero, now I have a balance of +20 and you have a balance of −20. Next, I buy bread from Thelma for ten credits. Now my account is down to +10 and hers is also +10.” Instead of paying money to use money, as in an interest-based credit system, credit is a free social good available to all who have earned the trust of the community. The key word is community here.

Pendo can play much more songs than a mutual-credit tune. The fundamental idea behind time banks is deeply egalitarian, both because everyone’s time is valued equally and because everyone starts out with the same amount of it. If there is one thing that we can be said to truly own, it is our time. A prime example is the famous fureai kippu currency in Japan, which credits people for time spent caring for the elderly. Time banking is also used extensively by service organizations in America and Britain.

The third or last tune are fiat-based complementary or proxy currency communities. In the first case it means that one can create a community where each member is provided with a basic income in Pendo. The later version would entail a convertibility of Euro into Pendo and vice verse (with a small fee). While they are technical possible they tend to create very specific dynamics and challenges for their administrators.


There are a myriad array of questions covering the value of Pendo, price formation (and pricing strategies) and of course reputation management. These are important to keep in mind when designing the economic laboratory. And so we are looking forward to the 15th of February where the team will present their designs and will share it with you.