Issue link: http://cp.revolio.com/i/356
34 Feb 2009 AI bIo enhAnCeD nAno neURo hUMoR FoReVeR YoUng I t was the biggest bank failure in history, and it came on the eve of a series of very bad days for US investors. on September 26, 2008, JPMorgan Chase acquired all the banking operations of Washington Mutual (WaMu), including $307 billion in assets and $188 billion in deposits. The fall of WaMu was the latest turn in a series of bank failures: the bankruptcy of Lehman brothers, the acquisition of Merrill Lynch by bank of America and the near collapse of insurance giant AIg. A similar but much less sweeping series of bank failures occurred about a year earlier in the computer-generated virtual world known as Second Life. ginko Financial — an unregulated virtual bank that promised investors real money in returns in excess of 40% — declared insolvency and was forced to repay $200 million in an internal currency called Linden Dollars. Second Life, established in 2003 by Linden Lab, is one of the fi rst mainstream virtual worlds. In addition to its own currency (which can be converted to US dollars), it has a fl edgling economy built around virtual goods. To buy or sell goods or services, you create a 3D graphical representation of yourself known as an avatar. Avatars can change appearance, talk with other avatars, and walk around inside of user-generated environments. More importantly, avatars can pay each other in Linden Dollars. 200 million in Linden Dollars may sound like a hefty sum for a computer-generated world. In fact, it is a mere 750,000 US dollars. In response to the ginko failure, Linden Lab shut down dozens of banks in Second Life. Although virtual, the banks were funded by real money. According to a new policy, Second Life residents cannot accept deposits in exchange for a promise of repayment with interest unless they provide proof of real-world regulatory oversight. What can we learn about real-world economics using the simulations provided by virtual worlds? Metanomics is an emerging — even edgy — fi eld of academic study that deals with the economic, legal, and regulatory issues of virtual worlds. Professor Robert bloomfi eld, host of a weekly webcast on Metanomics, oversees Cornell University's Johnson School doctoral program and directs its business simulation from Ginko to WaMu: Simulation in Virtual Worlds Models Real World Economic Behavior A similar but much less sweeping series of bank failures occurred about a year earlier in Second life. SURFDADDY oRCA