When is it permissible for an auctioneer to engage in self-bidding?

The correct answer is based on the ethical and legal standards that govern the conduct of auctioneers. Engaging in self-bidding is permissible only when it has been disclosed to the bidders beforehand. This practice ensures transparency and fairness in the auction process.

When auctioneers engage in self-bidding, sometimes referred to as reserve bidding or shill bidding, they may place bids on their own items to encourage bidding activity or reach a minimum sales price. However, without prior disclosure, this can lead to a breach of trust and manipulation of the bidding process, potentially misleading bidders about the true value and competitive nature of the auction.

By requiring prior disclosure, the regulations aim to maintain integrity and ensure that all participants are fully informed, allowing them to make informed decisions when bidding. This fosters a fair environment and helps uphold the reputation of the auction industry.