Theorem of the independent private values

The theorem of independent private values states that in a situation where multiple bidders have their own private estimates of an item's worth, and these estimates are independent of each other, the best way for each bidder to determine how much to bid is based solely on their own valuation. This means that the bidders’ private valuations do not influence each other directly, allowing for strategic decision-making based only on their own information. This concept underpins many auction designs, ensuring that bidders act according to their own private assessments without being affected by others' private information.