Let's put the story aside. The real question is: How do you know if your agent is truly representing you? The answer is, you don't - but that's not a reason to panic.
Negotiation is an art form, not a science. If you attempt to apply game theory to most real estate negotiations, you'll quickly find that the noise from trying to quantify the assumptions will drive you crazy.
We know that there are really only a few possible answers to an offer or counter-offer:
1. We accept.
2. We change.
3. We reject or ignore.
Part of the negotiating process is to know what your goal is and to have some strategy of how to get there. I may be asking 300 for my property, and my goal is to sell it for at least 275, but if you offer 220 I may not come back at 275, right? The strategy is to keep you in the negotiation with the objective of pulling you up.
Then, again, I might come back at 275, but with the warning that I'm not moving from there. Take it or leave it.
My telling you that I'm still willing to talk isn't "showing my hand" as much as it is telling you that, simply, I'm willing to talk, but your number is still too low.
Now, if I have an agent communicating this on my behalf, they are totally doing their job, even though it may look to you as if they're selling me out.
And that's the thing that isn't always apparent - whether the agent is, in fact, speaking for themselves, or for the clients.
That's my take.