I think primarily the fear that their boss will call their bluff, and they'll be forced to either admit the scam or quit the job and have to scramble for a new one.

That's for leaving your old job, not for negotiating with your new job.

You've hit the nail on the head. It's poker.

What if your boss says "ok, sorry. We can't match that?". That has happened to me multiple times with real offers. Then you either say "ok, well, I like this company so I'll stay", which sounds disingenuous, or you have to quit and find a new job.

If you feel under valued, and talking to your boss doesn't get you a raise, why not just look for a new job? Doesn't cost you anything.

Unless you either don't find one and/or do not want to move to another city.

Not finding one is no worse than not looking. I didn't say to quit. Looking for a job while you have a job is incredibly empowering. It puts you in the driver's seat. You don't have to get a job as fast as possible just to get a paycheck.... you can take your time and find a job that suits you, and that pays you well. You'll be more confident in interviews, more assertive when negotiating salary... Also, companies often tend to value people who are currently working higher than those who don't. If you're working, you implicitly have a reference from your current employer - they obviously think you're worth a recurring paycheck.

ethics, and usually they'd ask to see that offer and get the details!

Ethics is one thing, but forcing a candidate to produce a competitor's offer seems intrusive.

I had a (great) boss in my late 20s who was overjoyed to have me share my offer with him so he could go to bat with the corporate overlords (in another state) and get all the local devs a raise based on market conditions.

I was more than happy to share, but we also already had a relationship where I knew he wasn't out to screw me.

I have never shared one companies offer with another, nor would I. Of course if I company was not willing to negotiate I would immediately walk. I have just learned a lot about the people who work there.

I'd guess lying for financial gain can be prosecuted as fraud.

Same as lying about your previous salary.

So if a company tells me they don't have the budget to hire me and they really do, I should try to get them prosecuted for fraud? The company might be purposefully undervaluing me for their own financial gain. Lying goes both ways.

You can not be prosecuted for fraud for lying about your previous salary. That's ridiculous.