Probability-Burning Mechanism with Reserve Price for Single-Good Allocation Problem

We study a model in which a single good is to be allocated among n agents who face a reserve price. We propose a probability-burning mechanism that is budgetbalanced and dominant strategy incentive-compatible and “burns” some of the allocation probability at some valuation profiles and allocates the good with non-zero probability only to the top agent. We show that the reserve price that maximizes the expected total welfare of agents is non-zero, and at the optimal reserve price the mechanism generates more expected total welfare than the probability-burning mechanism of Mishra and Sharma (2018)