What is a chandelier bid?

A chandelier bid refers to a type of bid that is often a strategic move in the auction process, typically used to stimulate interest and encourage genuine bids from other participants. This practice can involve a bid that is placed at a level intended to entice other bidders, creating an illusion of competition. This method is named metaphorically as the idea of the auctioneer reaching for the "chandelier" in raising the perceived value of the bidding pool.

In the context of auctions, chandelier bids are not an actual reflection of what a genuine buyer is willing to pay, but rather a tactic to influence the bidding dynamics. The correct answer emphasizes the function of chandelier bids as a psychological tool to promote more active participation among bidders, differentiating it from actual sales prices or legal requirements.