Job market interviewing entails a massive duplication of effort.  You interview with each of your potential employers individually imposing costs on them and on you.  Even in the economics PhD job market, a famously efficient matching process, we go through a ridiculous merry-go-round of interviews over an entire weekend.  Each candidate gives essentially the same 30 minute spiel to 20 different recruiting committees.

What if we assigned a single committee to interview every candidate and webcast it to any potentially interested employer?  Most recruiting chairs would applaud this but candidates would hate it.  Both are forgetting some basic information economics.

Candidates hate this idea because with only one interview, a bad performance would ruin their job market.  With many interviews there are certain to be at least a few that go smoothly.  But of course there is a flip-side to both of these.  If the one interview goes very well, they will have a great outcome.  With many interviews there are certain to be a few that go badly.  How do these add up?

Auction theory gives a clear answer.  Let’s rate the quality of an interview in terms of the wage it leads your employer to be willing to pay.  Suppose there are two employers and you give them separate interviews.  Competitive bidding will drive the wage up until one of them drops out.  That will be the lower of the two employer’s willingness to pay.

On the other hand, if both employers saw the outcome of the same interview, then both would have the same willingness to pay equal to the quality of that one interview.  On average the quality of one draw from a distribution is strictly larger than the minimum of two draws from the same distribution.  You get a higher wage on average with a single interview.

What’s going on here is that the private information generated by separate interviews gives each employer some market power, so-called information rents.  By pooling the information you put the employers on equal footing and they compete away all of the gains from employment, to your benefit.

In fact, pooling interviews is even better than this argument suggests due to another basic principle of information economics: the winner’s curse.  When interviews are separate, each employers’ willingness to pay is based on the quality of the interview and whatever he believes was the quality of the other interview.  Both interviews are informative signals of your talent.  Without knowing the quality of the other interview, when bidding for your labor each employer worries that he might win the bidding only because you tanked the other interview.  Since this would be bad news for the winner (hence the curse), each bidder bids conservatively in order to avoid overpaying in such a situation.  Your wage suffers.

By pooling interviews you pool the information and take away any doubts of this form.  Without the winner’s curse, employers can safely bid aggressively for you.

Going back to the original intuition, its true there are upsides and downsides of having separate interviews but the mechanics of competition magnify the downsides through both of these channels, so in the end separate interiews leads to a lower wage on average than if they were pooled.

Perhaps this explains why, despite their grumblings, economics department recruiters are still willing to spend 18 hours locked in a windowless hotel room conducting interviews.

Addendum: A commenter asked about competition by more than two employers.  If six are bidding for you, then eventually the wage has been bid up until four have dropped out of the competition.  The price at which they drop out reveals their information to the two remaining competitors.  At that point  the two-bidder argument applies.