Interview stress is of the type I call "defusing the bomb": everything at stake, essentially immediate time constraints and confrontational. This never occurs in real life.
"Unfortunately something not so different sometimes does. E.g., you're at a startup, you have a critical demo for your best-hope customer, it was scheduled very aggressively because the CEO wanted to fit the customer's availability, it's happening in one hour, and nothing is working.
Not exactly confrontational (though it could easily get that way if you aren't careful) but just as stressful.
Of course it's far better to avoid such situations, but they do happen.
Usually those situations are just "grinding", you need to work expediently, and there is time pressure, but it is not immediate and you don't need to think nearly as much as in an interview. (code -> compile -> ohshit -> repeat quickly) not (oh shit, how do I solve this algorithmic question I have never seen). Most people don't freeze up in the 1-hour until demo situation.
On the other hand, the time constraints in an interview are immediate: you have a few minutes to come up with a solution to a problem (interviewer will put up with at most 10 minutes of silence or babbling), it's often a zero-to-one problem (usually there isn't a way to have a partial solution) and those factors combine into exponentially increasing sense of pressure: as time goes on you become less likely to solve the problem.
Finally, if this situation does happen at all and, contrary to my claim above, certain people do freeze up, it does so so infrequently as to be immaterial in a hiring decision in the vast majority of cases. Its practical importance is certainly disproportionate to the weight placed on it in interviews.
Person after person says they do fine in the job, yet have trouble with interviews.
I've presented in rooms where the lowest ranking officer was a colonel, and most were important people at the Pentagon. No freeze up, easy peasy, because I know what the hell I'm talking about and because I know I'm not going to be judged on some bullshit evaluation. (re: "x<<8 from above). Interviews are more a crap shoot. I mostly get offers, but sometimes just utterly choke. More importantly, I usually feel miserable after.
Don't make up theoretical situations when you have real, empirical data, please.
I made no comment on what kind of interview works best. I merely observed -- what is certainly true -- that sometimes "defusing the bomb" situations actually do come up in real life, where everything is at stake and you have to work under very severe time pressure.
Do you disagree that such situations sometimes arise in real life?
If not -- if your point is that that isn't necessarily a good reason for interviews to involve such situations -- then I think we are in violent agreement. I am not arguing for defusing-the-bomb interviews. I just don't think it's quite right to say that in real life you never have to defuse a bomb.
See my other comment but I think the differences are the immediacy of the time pressure, the sophistication of the thinking required and the all-or-nothing outcome.
So you're interviewing someone and basing a large part of the experience on something that would otherwise happen maybe 0.1% of the time? Also that CEO sounds like an asshole.