Real Time Classroom Tax Planning Using Experimental Markets.

Students participate in a laboratory market in which they act as' taxpayers with different tax rates, buying and selling securities with different tax attributes. They then analyze their behavior and relate it to the concepts of implicit taxes, tax clientele and market pricing mechanisms. Experimental market methodology, like that described here, can be used to study any market-based setting. Using this experimental market as a teaching tool may offer several advantages. The technique can foster critical thinking and it adds a hands-on dimension that brings learning alive in the classroom. In addition, significant carryover effects may be obtained. The market may help students become more comfortable sharing themselves with the group and, as a result, subsequent class participation may be enhanced.