Why would a seller start his bids at $1? I can think of two reasons:

1. Creates traffic. Sellers want "eyeballs". Why do certain sites pay to have you click on their site. The more people that click to an auction, the more people actually see and read the description of the item, the more people might give a second thought about bidding on the item. Bottom line is: if an item was worth $20 and a seller were quaranteed $20 even if the bid started at $1, ALL sellers would start at $1. NOBODY would start at $20. THERE IS VALUE IN STARTING AT A LOWER BID. There is, however, a risk involved. It's not morally or ethically right to eliminate that risk via the use of a shill bidder.

2. Starting all auction at a fixed price of$1 ($5, $9.95, or whatever) creates good will with the customer. At least that's how I feel. For the most part, I pass over auctions by people who start an action at the price they would sell the item at a show.