Myerson's theorem

Myerson’s theorem, in auction theory, states that for selling an item to multiple bidders with private valuations, the optimal way to maximize revenue is to design an auction that transforms each bidder’s potential bid into an adjusted value, called a "virtual value," and then awards the item to the highest virtual value. This method accounts for bidders’ valuation distributions and encourages truthful bidding. Essentially, it provides a precise strategy for auction design to ensure sellers get the highest possible expected revenue, balancing fairness and efficiency in auction formats.