Proxy bidding is a method used in auctions where a bidder allows a system to place bids on their behalf. Instead of participating in real-time, the bidder sets a maximum price they are willing to pay for an item. The system then automatically places bids incrementally, up to that maximum, whenever other bidders compete for the item. This approach is commonly used in online auctions, such as those on eBay, to streamline the bidding process. It helps bidders avoid the stress of constantly monitoring the auction and ensures they have a chance to win without exceeding their budget.