What does the term "shill bidding" mean?

Shill bidding refers to the practice of artificially inflating the price of an item by making false bids, typically by individuals who are affiliated with the seller or the auctioneer. This deceptive tactic is intended to create the illusion of competitive bidding, thereby encouraging actual bidders to place higher bids due to the perceived demand for the item. By engaging in shill bidding, a seller or auctioneer can manipulate the auction outcome to achieve a higher selling price than they would through legitimate bidding.

This practice is considered illegal and unethical, as it undermines the integrity of the auction process and can mislead genuine bidders about the value and demand of the item being sold. It is important for participants to be aware of shill bidding to avoid being taken advantage of and to foster a fair auction environment. In contrast, legitimate bids made by brokers or packaging strategies aimed at encouraging participation are ethical practices that support transparency in auctions.