Online Games and Economic Theory

Game Studies has posted a very interesting paper about virtual economies by Edward Castronova, an Associate Professor of Economics at California State University. He compares the rules of real-world economics to those of persistent world online games and explores ways in which the two economies might influence each other. "What seems most likely, on a broader level, is that a large migration of economic activity into cyberspace would have to have some impact on the way that one conceives of the macroeconomy. New statistics and economic management policies may have to be developed. However, if the emergence of virtual worlds does eventually require some governmental reaction, it is still not clear which Earth governments should be involved. Virtual worlds seem to exist as separate political entities at the moment, and this raises new constitutional issues."