Welcome to Econ Talk, part of the Library of Economics and Liberty. I'm your host Russ Roberts

of George Mason University and Stanford University's Hoover Institution. Our website is econtalk.org

where you can subscribe, find other episodes, comment on this podcast, and find links to

another information related to today's conversation. Our email address is mailadicontalk.org. We'd

love to hear from you. My guest today is Edward Castrenova, an associate professor in the Department

of Telecommunications at Indiana University. He is an expert on the economies of large-scale

online games and has numerous publications on that topic. His latest is a book Exodus to

the Virtual World. Ted, welcome to Econ Talk. Well, our topic for today is the ideas that are

in that book, Exodus to the Virtual World, and there are a lot of ideas in the book. It's

extremely thought-provoking, and it's rare to come across a book that argues that something that

you know nothing about is going to change the world in so many ways. You're either a genius

or very strange, probably both. So you'll probably take both, won't you? Yeah. So let's start with

some background. What is his large-scale online games that you discuss in the book, and why are

they important? Well, okay. So this is the crazy part. Let's start with crazy. Imagine you're playing a video game.

I'm sure a lot of the listeners have seen people playing video games or played them themselves, and

it involves like a screen, and you look, and you see a fantasy place with dragons, and then

your nephew is the character in the middle running around after the dragon. Well, what happened is

that same basic format has been set up on a central computer, like a central server that

you know the nephew logs into, and what's funny about it is like other people log in at the same

time. So you've got this world now sitting on a computer, and you might watch, you know, somebody

playing this video game. It looks like a normal video game. There's a dragon. There's the warrior

or whatever. And then also you start seeing other characters running around attacking the dragon.

...