When Dealing With Multiple Offers, Is The Other Agent Being Honest?

If you have been in a multiple offer situation before, I'm sure you have asked whether the other agent is being honest with you and your agent.  Maybe you've heard things such as "You need to be at "this" price to get the home" or "You will have to put shorter contingencies in your offer".  Things like this, and other things, can be suggested by the listing agent in order to get your offer accepted.  So, is that agent being truthful or are they yanking your chain to get a really high offer?  Well, let's sit in the listing agents' shoes for a minute.  Chances are, yes, they have another offer, if not a few.  Let's say they have 3 offers and the offers are like this:
Bob offered $500k
Sally offered $515K
John offered $499K
Then your offer comes in at $510K
Since your offer is in an acceptable price (and lets say all other things on the offer are similar or the same) they will take your offer into consideration.  Now, while looking at this from the listing agent's POV, in order to get the best price for the client, they could call you and Bob and say that $520K is the price that will get the offer accepted, which would be higher than Sally's offer. Saying this to you and Bob gives you guys the chance to raise your offers and get the house.  If neither of you choose to do this, they will most likely accept Sally's offers since this is still the highest.  But I know what you are thinking...it is possible that they have 2 offers and it goes like this:
Bob offered $500K
You offered $510K
And are you thinking that the listing agent calls and tells us that they have multiple offers and in order to get our offer accepted, you must come up to an offer of $520K (which would be pitting your against yourself)?  Chances are they are not doing this...and here is why:  If I were the listing agent, my job is to get the best and highest offer accepted to my client.  Having 2 (or even 3) good offers on the table is better than one, just in case something happens to my first chosen offer, I can have another as back-up.  If I were to tell the highest offer that they need to come up in price (which is playing a game of sorts), there is a chance the highest offer could walk away all together.  Then, not only have I lost my client's highest offer, but now we only have one offer to work with and if something goes wrong with this one offer, we will have to put the house back on the market, taking up more time and money from everyone involved. So, it would not be wise for an agent to gamble like this and in my opinion, I would not think this to be something a good agent would do.  So, if you ever find yourself in multiple offers wondering if someone is yanking your chain, try to think about what the other agent maybe be thinking and what risks would be involved if they were not being honest...chances are, they are just trying to get the best deal for their client and what you are hearing, is the truth.