Reminds me of the Star Trek episode, "A Taste of Armageddon" where two planets have been fighting a virtual "war" for over 500 years. Casualties are calculated by computer simulations and real people have to walk into disintegration chambers and actually die as a result. Now this is obviously the extreme of cyber warfare, but when people are removed from the day-to-day bloodshed of war and resulting physical damages, the impact of death is much like other virtual scenarios where those remaining just hit reset and the war continues.
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A Taste of Armageddon