Issue link: http://cp.revolio.com/i/356
35 WWW.hPLUSMAgAzIne.CoM laboratory. bloomfield, trained in experimental economics, sees both the realism of a field experiment with the control of a lab experiment in virtual worlds: "I have been studying this space for, I guess, over a year now, and I think it's very exciting." bloomfield's avatar name is "beyers Sellers," a nod to nobel prize-winning economist Vernon Smith – Smith studied the behavior of buyers and sellers who bid competitively on fictitious commodities. bloomfield calls Second Life markets a fascinating experiment in libertarianism and self-regulation. he says that everything he needed to know about the current real-world credit crisis he learned from virtual worlds: "Investors were all too willing to believe that they would earn their high interest rates, and bankers and borrowers, no doubt, were too willing to believe that the borrowers could pay the high interest rates demanded of them." Lack of regulation and subversion of honest financial dealings by a corrupt few in the interest of profit — sound familiar? While bloomfield's experimentation focuses on financial economics, how financial markets behave, and how they respond to regulations, Thomas Chesney of nottingham University business School is conducting experiments in behavioral economics using Ultimatum and Dictator games to examine fairness and altruism. In an Ultimatum game, individual A is given a sum of money and asked how s/he wants to split it with randomly paired person b. If the offer is rejected by person b, no one gets any money. In a Dictator game, person b has no choice but to accept the offer of person A. In tests conducted in both, Chesney found no statistical difference between the outcomes in Second Life and real life. ginko Financial and the other bank failures in Second Life were precipitated by a ban on gambling and shady business practices that bordered on fraud. WaMu failed under the weight of its enormous bad bets on the subprime mortgage business. In both cases, perhaps a trip to Las Vegas might have been a safer investment strategy. by studying the effects of self-regulated markets and fairness and altruism in virtual worlds, future experimental economists may be able to help guide real-world policy to avoid more failures like WaMu. Surfdaddy orca is a virtual worlds explorer and science writer. ReSoURCeS JPMorgan Chase Acquires banking operations of Washington Mutual http://www.fdic.gov/news/news/ press/2008/pr08085.html bank Failure in Second Life Leads to Calls for Regulation http://www.wired.com/gaming/ virtualworlds/news/2007/08/ virtual_bank Second Life http://www.secondlife.com Federation of American Scientists – Virtual Worlds Almanac http://vworld.fas.org/wiki/Main_ Page Metanomics – business and Policy In Virtual Worlds http://www.metanomics.net Metanomics Webcast http://www.metanomics.net/ Robertbloomfield