#narps:
Prediction Markets

We will measure peer beliefs about the main outcome variables by running prediction markets with another sample of neuroscientists and neuroeconomists who did not participate in the neuroimaging analysis, acting as traders. Similar to previous studies (Dreber et al., 2015; Camerer et al., 2016, 2018), researchers will be provided with monetary endowments and will trade on the outcome of the hypotheses via an online market platform. We will run a prediction market for each hypothesis, predicting the fraction of teams reporting significant whole-brain corrected results. A total of 70 teams independently analyzed the data. Trading on the prediction markets will be incentivized, i.e., traders will be redeemed based on their performance in the markets.

The markets will open for trading on Thursday, May 2, 4pm UTC (coordinated universal time) and close on Sunday, May 12, 4pm UTC.

In case you have any questions regarding the prediction markets, please contact Felix Holzmeister via [email protected].

**We cordially invite you to participate!**

How can I sign-up for the prediction markets? Registrations to participate in the prediction markets are administered via the sign-up form at the bottom of the page. A PhD degree (or currently being a PhD candidate) or a comparable level of expertise in neuroscience or related fields is required for participating to ensure expertise in the field. Registration to participate in the markets will close on April 29, at 4pm UTC.

How do prediction markets work? For each hypothesis, the prediction market price serves as an aggregate measure of peer beliefs about the fraction of teams reporting significant whole-brain corrected results. Detailed information on the market mechanism and instructions how to use the software are summarized below.

How can I access the prediction markets? The market can be accessed via a dedicated trading platform developed for the project. The software is available via markets.narps.info. Trader ID’s and passwords will be sent in a separate e-mail.

How will personal data be handled? When analyzing data from the market, we will identify participants solely through their trader ID. Personal data such as e-mail addresses or names will not be used in the analysis, will be removed from any published data, and will be deleted once payments for the prediction markets have been made.

How will market performance be incentivized? Trading on the prediction markets will be incentivized, i.e., traders will be paid based on their performance in the markets. Payments will be made after the markets close and the asset payoffs are determined by the actual number of analysis teams reporting a statistically significant result for the particular hypothesis. When signing up for the markets, participants have the opportunity to indicate whether the final payment shall be paid via PayPal or Amazon giftcards (either for amazon.com or amazon.de).

You can trade on the outcome of each of the nine hypotheses in a web-based market interface. Hence, we run one market for each hypothesis. Detailed information about the hypotheses, the experimental protocol, and the data set are available via data & analysis tab.

Your initial endowment is 100 Tokens (= $50), the market’s experimental currency unit. You can trade on as many assets, i.e., hypotheses, as you want to. For each asset, you can trade shares to forecast the fraction of teams who reported that the particular hypothesis was confirmed. Hence, the market price *P* is the aggregate belief of traders for the fraction of teams reporting that the hypotheses has been confirmed and can fluctuate between 0 (no team reports a significant result) and 1 (all teams report a significant result). The number of shares you hold when the market closes determines the payoff you will receive. This number can be positive (net buyer) or negative (net seller). At the end of trading (after 10 days), the true “fundamental value” (*FV*) for each market (i.e., the fraction of teams that reported a significant result for the particular hypothesis) is revealed and gains and losses are calculated as follows. Please note that you will only receive a payout for the shares you hold. Any Tokens not invested into shares when the market closes will be voided.

- Payoff for positive holdings (net buyer): If you have a positive position in a particular asset (i.e., net buyer), your payout is calculated as follows: fraction of analysis teams reporting a significant result for the associated hypothesis (=
*FV*) multiplied by the number of shares you hold in the asset. - Payoff for negative holdings (net seller): If you have a negative position in a particular asset (i.e., net seller), your payout is calculated as follows: (1 minus the fraction of analysis teams reporting a significant result for the associated hypothesis) multiplied by the number of shares you hold in the asset.

Once you have identified a market that you would like to trade on, click on the corresponding button to access it. In the trading interface , you will face two possibilities to trade:

- “Increase position by # Tokens”: if you believe that the fraction of teams reporting a significant result (=
*FV*) is higher than the current market price, you can invest here (i.e., act as a net buyer). Please enter how many tokens you would like to invest in this position, and press OK.
If you use this option to reduce a negative position, Tokens will be credited to your account. If you increase a positive position, tokens will be deducted.
- “Decrease position by # Tokens”: if you believe that the fraction of teams reporting a significant result (=
*FV*) is lower than the current market price, you can invest here (i.e., act as a net seller). Please enter by how many token you would like to lower this position, and press OK.
If you use this option to reduce a positive position, Tokens will be credited to your account. If you enter a negative position, tokens will be deducted.

The trading takes place via a computerized market maker using a logarithmic market scoring rule following Hanson (2007). When you invest Tokens to buy shares (i.e., if you increase a position), the price of these shares will move up. When you sell shares (i.e., if you decrease a position), the price of these shares moves down.

Additional information on the pricing mechanism
The pricing is based on an algorithm that keeps track of the net sales, s, of assets the computerized market maker has traded so far. After each transaction the algorithm sets the prices to
The price of negative shares, i.e., the predicted share of teams not reporting a significant result, is 1 – P.
The prices apply to an infinitesimal small investment. As you invest in an asset, its price will move. Parameter b in this algorithm determines how much trades affect prices, and is set to 100.
Example:
If you increase your position in a hypothesis (asset) by 10 Tokens there will be an infinite amount of small price changes. Therefore, when you invest 10 Tokens at an initial price of 0.50 you will not buy exactly 20 shares, but 19.09, as you bid up the price to 0.55.

You can track all your positions in the market overview when logged-in to the market software. For each asset, you can see the current prices (“Price”), how many shares you hold in a particular asset (“Shares Held”), and the current value of your position in Tokens (“Current Value”). The current value of a position is calculated as the number of Tokens you would receive by immediately closing your position in the asset.

Additional information on the value of your assetsAll Tokens which have not been invested will be voided when the market closes. All assets will be settled when the markets close according to the following rule: Each asset has a clear event outcome determining its fundamental value (FV). If you hold a positive position in a particular asset (i.e., net buyer), your payout is determined as follows: fraction of analysis teams reporting a significant result for the associated hypothesis multiplied by the number of shares you hold in the asset. If you hold a negative position in a particular asset (i.e., net seller), your payout is determined as follows: (1 minus the fraction of analysis teams reporting a significant result for the associated hypothesis) multiplied by the number of shares you hold in the asset. 1 Token corresponds to $0.5.

Payouts are capped at $200 per subject and will be paid out in June 2019. You will have the opportunity to choose between receiving your payment as an Amazon.com giftcard, an Amazon.de giftcard, or via PayPal when signing-up as a market participant.

Additional information on paymentsThe payout of a position in a certain asset depends on two numbers: the terminal value of the asset, i.e., its fundamental value FV, which is between 0 or 1 (depending on the fraction of teams reporting a significant result) and the number of shares you hold.