A troll priest sells a black kitten to a gnome warlock for 50 silver.

Question is, did the warlock get ripped off?

Associate Professor of Telecommunications Edward Castronova knows the answer to that question, and not just because he studies the economics of online role-playing games. Castronova actually plays the games, in this case, Blizzard Entertainment Inc.'s World of Warcraft. And he's not alone. He plays the game regularly with a group of economists, sociologists, and political scientists who share his scholarly and personal interests in the game.

"There's a community of researchers studying this stuff," Castronova says. "Five years ago the people who were studying these games were humanities or cultural theory folks. Now it's lawyers, economists, anthropologists, cognitive science people. The group is still relatively small -- 15-20 or so people -- but it's getting bigger."

And for good reason. Online role-playing games are growing more complex, realistic, and interesting. Most of the games contain marketplaces or auction houses. Players must interact with other players to complete tasks. The games simulate certain aspects of real life, and Castronova believes this presents unique opportunities for researchers.

"These synthetic worlds are petri dishes for a social experiment," Castronova says. "It's really exciting. This is the first time in human history we've been able to use incredibly complex societies to study some very basic problems in economics experimentally. Before, if you wanted to study society, you had to examine historical data or engage in wild, inappropriate, speculative theorizing. How would our world be different if people had been able to test communism experimentally beforehand?"

Among Castronova's current research projects is his study of how, where, and when in-game marketplaces form, and under what circumstances marketplaces spontaneously move. World of Warcraft has market activity in each of its cities, but frequently, players interested in buying and selling items and services only congregate in two of the world's six capital cities, the dwarven capital Ironforge and the orcish capital Orgrimmar. It just so happens that Ironforge and Orgrimmar are the only two capital cities with auction houses, where players can buy and trade without having to resort to curbside hawking.

Forget adventuring. If these games elicit any kind of behavior from players -- including the Chinese -- it's capitalist-style opportunism. Chat channels in any of WOW's capital cities are dominated with broadcasted messages like "WTS [ Glowing Brightwood Staff ] 700 G PST" and " WTB Port to Thunder Bluff." Translation: "Want to sell [ Really nice object ] for 700 gold pieces, tell me if you're interested" and "Want to buy magical, instantaneous transportation to a faraway city," which, by the way, is a service only certain characters in the game can provide.

With all the buying and selling going on, WOW's more active marketplaces may resemble the floor of the New York Stock Exchange during Halloween. Amid all the chaos, players may try to cheat or abuse each other. It's possible, for example, for a monopoly-minded player to buy up an item in high demand at the auction house, then resell the item at exorbitant prices. At which point a buyer might resort to shouting to nearby players, asking whether they would be willing to sell the item at a more reasonable price.

"I have a colleague at a well-known university," says Castronova, "who uses the auction house to arbitrage sales. He finds market opportunities and executes them. Making a little money here and there feels the same as doing day-trading on the stock market."

But the capitalism doesn't end there. A growing population of players (WOW subscriptions are nearing the 6 million mark worldwide) and a demand for game gold and items has created a real-world market. An eBay search using the keyword "warcraft" turns up thousands of items for sale. In-game gold dominates the offerings, but single items, like swords and robes, and pre-fab characters are also there. Some players take pictures of their characters to increase the allure.

Castronova says entire businesses have been created – often in low-wage countries -- in which Chinese players, called "gold farmers," generate in-game gold and sell it for hundreds of U.S. dollars (or U.K. pounds or Japanese Yen). But are in-game characters and gold really worth anything? Is anything in a world that exists principally in our imaginations worth real money?

"What is real money?" Castronova asks. "Is the money in your pocket real? It's real because everyone says it's real -- and because there's a social equilibrium in which people ascribe value to it. The value of currency is based on that equilibrium, which is a matter of supply and demand. If the supply and demand for gold pieces creates a market where those pieces have a price in terms of dollars, then yes, the gold pieces are indeed worth real currency."

To those who would argue online role-playing games cannot provide a proper model for economics studies, Castronova would remind them today's video gamers aren't who they used to be. "That argument flies when 'video gamer' identifies 100,000 sweaty 16-year-old boys playing shooter games in their mom's basement," Castronova says. "When it becomes millions and millions of working adults, getting involved in alternate reality spaces with as much political, economic, and social richness as the real world, the argument loses its power."