Abstract

http://ssrn.com/abstract=936924
 
 

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The Tobin Tax - A Game-Theoretical and an Experimental Approach


Johannes Kaiser


University of Bonn - Laboratory for Experimental Economics

Thorsten Chmura


University of Bonn - Faculty of Law & Economics; Nottingham University Business School

Thomas Pitz


University of Bonn

July 19, 2007


Abstract:     
In the nineteen-seventies, James Tobin suggested the introduction of a transaction tax on the currency market to cope with exchange rate volatility. In spite of his proposal being discussed frequently and very controversial ever since by economists and policy makers, the so-called Tobin tax has never been imposed on any currency market. We investigate the consequences of the introduction of such a tax on an asset market model from a game-theoretic and an experimental point of view. Our main results include in respect to our model that contrary to the situation in game-theoretic equilibrium, the Tobin tax i) reduces trade volume, ii) reduces volatility, iii) increases market efficiency, and iv) decreases earnings inequality. These effects are likely to disappear if the tax rate is high.

Number of Pages in PDF File: 48

Keywords: Tobin tax, behavioral finance, experiment

JEL Classification: C91, D44, E44, E58, F31, G15

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Date posted: October 12, 2006  

Suggested Citation

Kaiser, Johannes and Chmura, Thorsten and Pitz, Thomas, The Tobin Tax - A Game-Theoretical and an Experimental Approach (July 19, 2007). Available at SSRN: http://ssrn.com/abstract=936924 or http://dx.doi.org/10.2139/ssrn.936924

Contact Information

Johannes Kaiser (Contact Author)
University of Bonn - Laboratory for Experimental Economics ( email )
Adenauerallee 24-42
Bonn, 53113
Germany
+49 228 73 7497 (Phone)
+49 228 73 5007 (Fax)
HOME PAGE: http://www.bonneconlab.uni-bonn.de
Thorsten Chmura
University of Bonn - Faculty of Law & Economics ( email )
Postfach 2220
D-53012 Bonn
Germany
Nottingham University Business School
Jubilee Campus
Wollaton Road
Nottingham, NG8 1BB
United Kingdom
Thomas Pitz
University of Bonn ( email )
BWL 1
Adenauerallee 24-42
Bonn, D-53012
Germany
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