My avatar—a bronzed brunette in jeans and a purple sweater—recently visited an island in the virtual world where INSEAD, an international business school with real-world classes in France and Singapore, is building a virtual campus. Although she nearly drowned on a guided tour of the still-under-construction island, it was an eye-opening experience. INSEAD is one of the first management schools to dip a toe into the online economy, instead of merely studying it. Despite the vibrant economy of Second Life—a three-dimensional alternate universe complete with its own currency—and the hype about virtual worlds having the potential to change the real-world economy the way the Internet did in the 1990s, most business schools are taking a cautious approach.

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