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Benito comments on Harry Potter and the Methods of Rationality discussion thread, January 2015, chapter 103 - Less Wrong Discussion
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Public excoriation of failures usually lowers everyone's performance (in complex tasks or those that require creativity, like the candle/drawing pins test). If, in dangerous situations, his students are afraid that they will fail by dying, they're going to be less effective at defending themselves.
I think the effect of his statement was to better calibrate his students' attachment to written tests (make them less worried), but also to make them more vigilant in life.