Perhaps the willingness to prepare indicates the candidate is motivated and the algorithmic knowledge they gain from it forms a solid basis and language in which it is possible to test their problem solving abilities?
(I've known many engineers who wing things at work rather than spend the time to research a correct solution, and not just in software.)
That's not been my experience. I've seen a strong correlation.
> show their willingness to do whatever they are told
I don't think it's the same thing. I've told many of the people I've worked for that what they asked me to do was a waste of their resources. One told me "do it 'cuz I'm the boss and I say so" to which I replied "at the salary you're paying me, I feel obliged to tell you that what you're asking will never work". :-)
Nevertheless, if you know upfront that at a job interview you will be asked certain questions, and you choose to go to the job interview, it seems bizarre to not come prepared. Why bother?
Like said, might be culture or maybe I have been lucky.
In my country (I haven't lived there for a while so might've changed but I don't think so) and my company we were not so salary obsessed, so 'at the salary you pay me' is a phrase used never in our office of few 100 colleagues. If you make 5 or 9 figures a year; if the boss tells me 'do it cuz i'm the boss' I'm not doing it if it's a stupid idea and I expect that from my colleagues even if I outrank them technically.
So still thinking it's culture as well; here you cannot fire people easily; you have to make a dossier (with obvious mistakes/flaws etc) and go to a judge and then pay them a few months. So there needs to be much more of a trust relation than master/slave relation imho. Note that we only needed that twice when the employees where watching/downloading pr0n all day. One was a junior designer and the other a phone support employee for our cms.
Edit: btw, i'm not saying I like that system per-se; in some countries (like Spain) it goes too far and you won't hire people because you can't fire them, but in NL I had no actively sabotaging people (you can't fire me so I do just enough); quite the opposite, while in Spain I meet too many of them.
None of this should be construed as a master/slave relationship.
For an analogy, if I go to McDonald's I am not interested in the opinions of the cashier, I just want to pay the money and get the burger. If I'm going to an expensive restaurant, I'm interested in the opinions of the waiter about what to order - that's part of what I'm paying for.