One of the hardest and best exams I had to do in university was my behavioural finance midterm exam: the format was that I had to sit down with the professor and have a five minute discussion on a topic of my choosing. It was surprisingly tough, and the process of verbalising what you know about a topic doesn't give you much room to hide.

Accurate and high-quality exams are a solved problem. The issue is that universities aren't necessarily judged on teaching quality and opt for examination methods that scale well.