What is 'shill bidding'?

Shill bidding is characterized as an unethical practice where the seller or their agents place bids on their own items to artificially inflate the price. This tactic creates a misleading impression of competition and demand among genuine bidders, influencing them to place higher bids based on the false representation of interest in the item.

This practice undermines the integrity of the auction process, violating ethical standards and often legal regulations governing auctions. When shill bids are placed, it can lead to significant financial losses for legitimate bidders who believe they are participating in an honest bidding environment.

The other options do not accurately reflect the nature of shill bidding. For instance, the concept of increasing auction participation, minimizing competition, or estimating an item's value does not encompass the deceptive and manipulative nature inherent in shill bidding. The correct answer captures the core issue that shill bidding presents, emphasizing its role in undermining fair auction practices.