While you make a solid point that can be important to see how someone deals with failure, giving a candidate no room for success is problematic. Honestly I really dislike this format as it doesn't allow the candidate to establish trust with the interviewer when their first impression is the interviewer just set them up for failure. The interviewee point of view is equally as important as the interviewer's as the candidate is about to dedicate a portion of their life to the company. If the candidate also has multiple prospects, why would they choose the company that set them up for failure when they can go with the company that treated them well throughout the process?
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