Nothing prevents you from using it. It just isn't efficient so it is very rare and fairly easy to spot.
I would agree that repeated, chronic shill bidding results in various patterns which could be spotted. It's all a matter of degree. If one didn't get greedy then the main risk would be outbidding the real bidders.
Just do searches for "shill bidding" and read up on it.
Did so already. Got hits both on how to spot it and how it can be effective.
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Can't argue that the basic economics of supply & demand are more powerful forces here than any shill bidding that might be going on. A shill can attempt to fully extract a bidders reserve but not create bidder demand for an item or restrict supply. Well most bidders can't, if you could then you'd have a monopoly!
Game Theory Source
I probably heard more about game theory in that one movie that I had before watching it. Game theory had been around long before John Nash although he did contribute to it a lot, and the movie to my awareness of it.