RATIONAL-EXPECTATIONS AND TAX POLICY - EXPERIMENTAL MARKET EVIDENCE

Experimental markets are used to test whether: (1) subjects' forecasts of future and unknown policy conform to the rational expectations hyp othesis; and (2) subjects' purchases of commodities are made in antici pation of such policy. Forecast results confirm previous studies that support adaptive expectations. On the other hand, subjects exhibited a type of 'as if' rationality by learning to alter their commodity purc hases intertemporally in anticipation of fiscal changes, This ability was only slightly diminished when policy was stochastic or when the mi cro economies were in disequilibrium (and in chaos).