I’m surprised that companies match competing offers or become more aggressive to have you join when they hear you have other options. I understand the basic social premise “they are wanted; therefore they must be good.” But, aren’t tons of people always interviewing anyway? It’s surprising to me that this small amount of signal can cause companies to pay you $100k-200k to match your competing offer.
In my experience it's to gauge how high within the band they need to pay you to get you. They already know they want you... This is just negotiation towards the lowest cost at which they can get you. Companies would RARELY EVER go beyond a band to get someone. That would have to be a very special circumstance.
It's a gambling game for the company. The company was always willing to pay you x, but if they are 90% sure you'll accept x-50k they will offer that instead. However once you show you have another offer for x-10k, the odds of you accepting x-50k go way down so they offer x. Hiring is expensive, time consuming, and could delay products. Once they find someone it is (usually) worth it to pay a little more.
In trading terms, this is basically price discovery. Someone bid on you for X. They may only need to beat that.
Talk to an attractive girl in the bar, show confidence and get her to express attraction in you…just about all the other girls in that bar will find you attractive without ever having talked to you.
They pay what’s necessary on a person by person basis to meet their hiring goals
There are multiple ways to gauge a candidate such as LC, counter offers etc and if it is Amzn . LPs as well