A top-only mechanism with reserve price for single-good allocation problem

Aditya Vikram

Economics Letters, 2022, vol. 217, issue C

Abstract: We study a model in which a single good is to be allocated among n agents who face a reserve price. We propose a top-only mechanism that is budget-balanced and dominant strategy incentive-compatible and “burns” some of the allocation probability at some valuation profiles. It 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 mechanism of Mishra and Sharma (2018).

Keywords: Budget-balanced mechanism; Reserve price; Single-good allocation (search for similar items in EconPapers)
JEL-codes: D44 D82 (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:217:y:2022:i:c:s0165176522002075

DOI: 10.1016/j.econlet.2022.110646

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