Exploding offers are bullshit

I do a lot of recruiting and have given maybe 50 offers in my career. Although many companies do, I never put a deadline on any of them. Unfortunately, I've often ended up competing with other companies who do, and I feel really bad that this usually tricks younger developers into signing offers. On numerous occasions, I've gotten an email halfway through the interview process

Erik,
I'm very sorry, but I'm not going to move forward with the interview process.

Another company gave me an offer and they need a decision by Thursday.

Best regards,
XYZ

Every time, I have to explain to candidates that exploding offers are bullshit. I don't even know where to start:

1. It's clearly just a bluff. Companies have no leverage in the situation. They would never lose a candidate that wants a few more days to think. At this point, they already spent thousands of dollars in interviews and sourcing, and there is no way they have any sort of leverage whatsoever. In a setting where you have one job and many applicants, exploding offer might make sense, but this is not the Great Depression and the power balance works the other way around.
2. It's taking advantage of people who are the least confident about the recruiting process and are the least comfortable asking for more time. You could argue it's a form of price discrimination where companies end up paying less than they would otherwise do for people who are less confident about themselves. Imagine that exploding offers would be illegal – some companies would now have to pay more to get the people that they would otherwise get.
3. It creates a race to the bottom that no one benefits from. Other companies have to start using exploding offers too. If a candidates feels pressured into accepting an offer that they would not have accepted otherwise, that's real value that gets destroyed. The candidate loses because they end up accepting an inferior offer. For the companies it nets out zero or negative – company A gains a role that company B lost, for a slightly less cost, but with a candidate that's slightly less motivated.
4. (More speculative) Shady behavior is rewarded. Companies who try to trick candidates are more likely to be shady in other ways – this is another reason how candidates lose out.

This is corroborated by some experiments (although who knows, I have my doubts about any behavioral studies):

• “Across multiple studies, we find that a large portion of proposers issue exploding offers even though this results in substantially lower payoffs to themselves." – from Exploding offers can blow up in more than one way
• “At the market level of analysis, the results suggest that exploding offers lower the quality of matching outcomes." – from Power balance and the rationality of outcomes in matching markets

That's why I never give exploding offers.

Every time I get an email like the one above, I tell the candidate that they should just hold off and ask for a few more days. There's only upside in having one more option on the table. Often it works out fine, sometimes it doesn't. Of course, in a lot of cases my company wasn't the top choice anyway, and the candidate ends up joining whatever company they wants. My conversion funnel is as leaky as most companies. But every time you remove one more choice, you remove the possibility that that choice was actually the best one.

I remember once more than ten years ago when I had never had a “real” job and a company had scheduled an interview. The only problem was that I realized it was on my last day of a trip. I ended up spending about $100 extra to get back one day earlier (and of course the interviewer was sick that day and cancelled on me last minute). I clearly misunderstood who really had the leverage here.

Law firms recruiting at law schools had the same problem that reated a race to the bottom. In the end they ended up self-regulating, realizing that an uncoordinated competition would benefit no one – certainly not the students, who would be pressured into accepting roles without considering all options, and for the companies, that would hire a long time before graduation where data was less reliable.

“There's also concern that students will focus too early — the summer after their first year — on where they might want to work once they graduate instead of exploring their options before getting locked in. NALP's voluntary recruiting guidelines allow firms to interview and extend summer-associate job offers early; however, firms must leave those offers open until 28 days after on-campus interviews begin at the student's law school. The rule is intended to prevent so-called exploding offers that expire before students have time to weigh all their options. Firms have largely adhered to the rule and have not pressured students to accept early offers before the traditional recruiting season begins, career-services administrators said."

Even though self-regulation worked out well for law firms, I doubt that it will ever work in technology. But junior developers should be aware that exploding offers are really just bullshit. Everyone would be better off if exploding offers disappeared. Please call the bluff when you see it.

(Edit: See the Hacker News discussion)