Entrance exams and time constraints

A big thank you to all those who contributed to the interesting comments thread in my previous post on entrance exams. Picking up on it, Gaurav discusses the issue of tough -- but prestigeous -- exams (such as the IITs' JEE) making students concentrate more on acquiring exam-cracking skills at the expense of acquiring other skills (such as communication skills) which are important in the real world.

Which brings up yet another point that was brought up by Viswanath Talasila in an e-mail. Essentially, he wonders why our entrance exams are all time-bound.

I cannot understand in what way does society need a merit that is almost exclusively based on students being able to answer (easy or difficult) questions in a very short time. It is the time factor that is THE defining feature of most entrance tests. It is obvious that for many students, if they are given a reasonable amount of time to think about the (even very difficult) questions, they would come up with the right answers. OK, if it is not obvious, then at least a formal study should be conducted to check this. [...]

This is a talent - no doubt about it. [...] What I fail to understand is why would society, as a whole, need such a talent?

He then goes on to give examples of situations that need problem solving skills: academic research, industrial research, day-to-day engineering design and analysis, or even in businees. While there are situations where one does have to make snap decisions, they deal with questions that are fundamentally different from those in entrance exams. Which is to say, such snap decisions are about problems in which not everything is known: decision making in the presence of uncertainty.

So, what are we measuring in entrance exams with time constraints? And, as Viswanath asks, "if the real world works differently - why do we insist on setting up our exams this way?"