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Abstract. Analysts have been found to underweight the innovation in the most recent quarterly earnings when forecasting next‐quarter earnings, and these expectations have been posited as an explanation for post‐earnings‐announcement drift. This study uses an experimental asset market to examine whether similar errors in forecasting quarterly earnings are made by student‐subjects. We examine two aspects of their behavior: (1) do subjects underestimate the autocorrelation in quarterly earnings when forming earnings expectations? and (2) are asset prices consistent with a subject's underestimation of the autocorrelation in quarterly earnings? We observe subject errors in forecasts that underweight extreme innovations in the most recent quarterly earnings by approximately 40 percent. The prices in the experimental markets also fail to reflect fully the most recent innovation in quarterly earnings. We are able to predict the sign of the incorrect pricing, from the mean initial earnings predictions of the subjects, in 74 percent of the 135 markets. These forecast errors observed in this study are consistent with forecast errors observed for analysts, and this consistency suggests that errors in analysts' forecasts may be at least partially attributable to the use of judgmental heuristics.

Stiglitz (1985) shows that income deferral opportunities and differentially taxed economic activities provide incentives for investors to engage in tax avoidance strategies. In this paper, I describe several tax avoidance strategies that can be used by taxpayers in a Hall-Rabushka flat tax system to reduce or eliminate their tax liabilities. Effective tax planning continues to be viable in a flat tax regime because the idealized environment envisioned by the proposal does not consider taxpayers' strategic response to the new system. These tax planning techniques can affect economic behavior, compliance and enforcement costs, and the distribution of the tax burden.

Extant literature suggests that the process of constructing a teaching portfolio can identify areas to improve, motivate positive changes, and elevate the importance of teaching in academe. This study describes the experience of the tax faculty at a public university in using teaching portfolios and peer reviews to improve the quality of the first two tax courses. The type of teaching portfolio used in this project consists of a course syllabus and a reflective statement that documents the rationale for all components of a course (i.e., lectures, projects, exams, writing assignments, presentations, etc.). The peer review aspect involves written feedback from a colleague on this teaching portfolio. Though research publications are usually subject to extensive peer review, teaching generally is not. Like research, however, teaching can be evaluated and ultimately improved through peer review. Thus, this study can provide valuable guidance to tax professors attempting to improve their courses.

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