Virtual worlds are computer-generated, immersive environments where participants interact with others while engaging in social, entertainment, and economic endeavors. To illustrate how virtual worlds can be used to study fraud, we examine documented virtual world fraud cases using the “fraud diamond” model (Wolfe and Hermanson 2004). Our findings have real-world implications regarding the causes and prevention of fraud. They include: (1) perpetrator motivations often include non-monetary achievement and manipulation, as well as financial gain, (2) fraud victims tend to have misplaced trust and overestimate the capability of fraud prevention governance mechanisms, (3) participant-designed record-keeping systems may protect corporate assets from theft, and (4) virtual worlds may serve as a laboratory for evaluating risk management strategies. We also identify future research questions related to these issues. This research illustrates how parallels between fraudulent behaviors in virtual and real worlds can advance our understanding of fraud antecedents.

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