Theorem of Independent Private Values

The Theorem of Independent Private Values states that, in certain auction settings, each bidder's private information about their own value for an item is independent of other bidders’ private information. This means that what one person values the item at doesn’t influence or reveal what others value. As a result, each bidder bases their decision solely on their own assessment, and knowing others’ private valuations doesn’t change their strategy. This assumption simplifies analyzing auctions by allowing us to treat each bidder’s private valuation as separate and unaffected by others’ private knowledge.