Property Rights at Risk?

 Since we have learned from David Landes about how disastrous deviations from property rights can be for economic development, I was distressed to learn about the dangerous turn occurring in virtual reality.

BusinessWeek tells the story of a lawyer, named Marc Bragg who was expelled from the online game Second Life by the company which runs the game, Linden Lab, which also confiscated his virtual property. Mind you, such virtual property can be sold for real money. His apparently was worth $3200 according to a report in Wired, although he seems to have been able to withdraw $1200.

http://www.wired.com/news/culture/0,70909-0.html

Wired explains in a language that I cannot really comprehend:

” But the hacker-like method he used to exploit the auction system may hurt his case. Bragg copied the URL for a legitimate auction, then swapped in the ID number for land not yet up for sale publicly, so there would be no minimum bid and few, if any, competing bidders.”

Over on a web site that covers such issues,

http://www.secretlair.com/index.php?/clickableculture/entry/real_world_lawyer_files_suit_against_virtual_world_maker/

the denizens of Second Life are not sympathetic to the lawyer, but I still worry that the lack of secure property rights might threaten the future prosperity of this virtual world.

McConnon, Aili. 2006. “Virtual World, Real Courtroom.” Business Week (16 October): p. 13.

“A property dispute in Second Life, the online universe where more than 800,000 “residents” socialize and invest real money in virtual land, businesses, and products, has wound up in a bricks-and-mortar court in Pennsylvania. In the first lawsuit against Linden Lab, which owns Second Life, Marc Bragg, a former SL denizen, filed a case in a county Court of Common Pleas, contending that Linden Lab wrongly canceled a virtual land purchase he made earlier this year, keeping $2,000 of his investment and expelling him from SL in a dispute over whether he violated auction rules. He wants his money back, his membership reinstated, and punitive damages.”

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