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BRIAN WATT: I gotta admit: I left the video game arcade some 25 years ago and never looked back. Nowadays, a lot of the same fun can be found on the Web where so-called Massive Multiplayer Online Games are a popular way to while away time. World of Warcraft, Everquest, Eve Online. Fans spend hundred of hours logged on and living out their heroic fantasies. But among the wizards and elves that populate these cyber worlds, there's another strange creature lurking in the shadows: the economist. As David Martin Davies discovered.
DAVID MARTIN DAVIES: In the World of Warcraft my character, a warrior minotaur, has just finished a quest and has come back to town. I've been rewarded with some gold and silver which I'll use to bid on a more powerful battle mace that's being auctioned.
All around me other players are buying, selling and crafting weapons, medicine and armor.
It's a vibrant and growing economy, and economists like Edward Castronova are noticing.
EDWARD CASTRONOVA: In everything that I've seen happening in these games, there's not a single thing that violates economic theories that we know.
Castronova is a professor at Indiana University and has written the book "Synthetic Worlds."He calls these computer games "Petri dishes of macro economic theory."
CASTRONOVA: What we have not been able to do is do experiments at the level of all society. And these things are big societies and they have thousands and thousands of people in them, so we've got lots of questions about how the macro economy operates.
And one nightmare economic scenario these games can simulate is a complete market meltdown. And that's just what happened in some online games. Not by design, but because the guys who were running the games didn't know squat about economics.
That's what caused the hyper-inflation and then economic collapse of the game Ashron's Call.
Sam Lewis was trained as economist but now he's a MMO game designer. He created the economy for the original Star Wars Galaxies online game.
SAM LEWIS: People just had buckets and buckets of cash. It's sort of like the confederacy in 1863. You went down to the market with a wagon full of cash and came back with a handbag of food.
Recently Lewis gave a seminar at the Austin Game Conference about the economics of Online Games.
LEWIS: The games are about adventuring and about having a fantasy and then the economic side is a second game once you get bored with the first game.
Like in the real world, some players take to the economic part of the game better than others. They get rich.
And sometimes the player builds wealth by cheating other players which happened recently in the game Eve Online.
One player ran a classic Ponzi pyramid investment scam and ended up ripping off the entire population for a total of $700 billion in game credits. If he sold that loot on eBay he'd earn about $700,000 real American dollars.
Castronova said this just one more economic principle that also applies in the cyber world.
CASTRONOVA: There's a virtual sucker born every minute — maybe every second, I don't know, everything happens so fast there.
From cyberspace, I'm David Martin Davies for Marketplace.