I'm a bit disappointed in Orin's examples and responses, because I was hoping someone would argue that we ought to work hard to use the virtual world, which is to say carefully a demarcated part of the real world, as an experimental domain free, or almost free, of the law that permeates the rest of our worlds. I thought Orin was heading there with his provocative paper, though that one begins with a more modest claim about criminal law (not all law) and virtual harms (no leakage into the real world). My debate point was that legal intervention is to be expected ("law goes where we go") and that it would be hard to argue that law must absolutely stay away from things virtual ("virtual wrongs can be real wrongs"). But now I see that Orin was not aiming to argue, or at least not broadly argue, against LIV (legal intervention in virtual worlds), but rather is holding out for the narrow point that if there are examples where the wrong suffered is a purely virtual wrong, then there should be no real remedy. In his world, virtual and real, if my game character cheats and kills yours, then your remedy is with the game administrator and, if you are in the right, your character might be returned to its pre-wrong state -- in a wonderful imitation of the remedial norm we aspire to in the real world. We are left to debate pre-judgment interest.
So let me switch sides here, at least for a while. One of the things we might gain from the virtual world is a means of experimenting in order to learn about the real world. Another is that the virtual world might allow reasonable opportunities to opt out of real world law. In our familiar world, if A threatens or defrauds B, B has a remedy if injured, and this is so whether A acts in person, through the mails, on the phone, or (as Orin seems to assent) through his computer and even through a virtual world application. If A and B (and here I underline B, as a willing participant who might prefer to deal with A under a different legal rule or for the benefit of a better price in some transactions) want to opt out of the real world's rules regarding violence and fraud, they must go to another jurisdiction, perhaps the Playman Islands, and hope that they have insufficient contacts with the mainland in order to avoid the reach of its laws. This is a high transaction cost solution, and often one that is unavailable because most people in the Playmans also prefer rules against fraud, enforced by the state.
Isn't there a case to be made for allowing virtual worlds to house such law-free transactions for willing players? Legal Entrepreneurs, or "game administrators," can offer alternative rules and even require that real bonds be posted and forefeited for violations. For this to work, however, the law of the real world must look the other way even, or especially when, there is leakage to the real world. Indeed, the libertarian or experimental pattern I have in mind here is not really a matter of virtual versus real, but rather a way of roping off a part of our activity and communication in order to make law comfortable that those involved are willing participants in this other regime.
It is easiest to see this with games, and only a bit more difficult to do so with sales. C might agree to buy D's auto "as is," through some listserv that specifies remedies for fraud or disappointment. I'll call this a virtual classified ad section, even though it is plainly like the conventional classifieds, except that C and D might interact anonymously, so that no revenge can be taken in the off-listserv world. They may even enjoy undertaking the real transaction through avatars in the virtual world. The point is that the virtual world allows us, or at least these parties, to experiment with different forms of arbitration, class actions, and innovations that would be of uncertain stability and enforcement in the real world. In the real world, law likes its monopoly and puts limits on arbitration agreements, "as is" clauses, and so forth. The legal/real world may not like this alternative, virtual world; among other things, if the rules in the virtual sales world are very much like those in the real world, we will see that the driving force was tax evasion or the marketing of stolen property. But it is possible that the benefits of an alternative legal universe outweigh these costs, and I think there is a case to be made for some such experimentation - though I am too much of a positivist to make it.
Let's take a harder case. Some of the sites that develop to facilitate communication among patients (and families) with intense interest in a particular disease, might choose different rules of engagement. Self-styled medical practitioners can then, alongside "real" physicians, offer advice - and some of this advice will be crazy or even malicious. The real world effects can be fatal. Still, it is possible that willing participants ought to be able to experiment and avail themselves of such sites, without fear of real world legal action. The more one thinks that the real world's medical and legal communities are flawed, the more one would value such experimentation. Again, it is as if it were inexpensive for everyone to travel to the Playman Islands to seek help with this disease. And in the end, if there is a serious threat to order in the real world, law can take the drastic step of banning travel to the Playman Islands; law can choose to shut down some virtual sites if they surpass the boundaries of what we were willing to accept with regard to our own citizens entering other jurisdictions.