WIRED's January 2003 print issue features an article on the economics of massive multiplayer roleplaying games (The Unreal Estate Boom). LawMeme reported on this last April (Rise of the Video Game). Then, Prof. Edward Castronova of the economics department at Cal State Fullerton had written an analysis of the real world economics involved in the online game Everquest, determining that the gross national product per capita is $2,266, bigger than China's and just below Russia's (Virtual Worlds: A First-Hand Account of Market and Society on the Cyberian Frontier).
One fact from the WIRED article I hadn't realized before is that the amount of money changing hands in game-based auctions on eBay and the like, is about three times the revenue the game designers receive from the subscriptions. Truly strange, but perhaps inevitable:
Scarcity, after all, breeds markets, and markets will seep like gas through any boundary that gives them the slightest opening - never mind a line as porous as the one between real and make-believe.
"The minute you hardwire constraints into a virtual world, an economy emerges," explains Castronova, the Adam Smith of EverQuest. "One-trillionth of a second later, that economy starts interacting with ours."
These economies are, of course, very fragile, as cheats (such as bugs that permit rapid duplication of items, or "trainers" that permit an avatar to perform a financially beneficial task 24/7) can create immediate hyperinflation. Not to mention the fact that the creators of the game can and do alter the economy drastically with a minor code change.
This remains a fascinating social, economic, and, eventually, legal issue.