Why are recommendation letters highly relied upon? For any kind of academic application (from graduate admission to professor position), recommendation letters have a major impact on the outcome. The basic idea is understandable: discovering what others think about the applicant. It can help the review committee to decide about the applicant.

However, recommendations letters cannot be statistically reliable. For instance, when all recommendation letters of an application are highly positive, this cannot guarantee that all colleagues think highly of the applicant. Instead, it can be the result of only a few friendships. 

In a typical example, if someone has three socially close friends (including current colleagues, coworkers, past professors), then, his applications are always supported by strong recommendation letters. For example, one could have conflict with his entire university, but having close social connection with three persons who can recommend him.

So, why are recommendation letters relied upon so highly, given these limitations?

UPDATE: I do not mean friendly recommendation letters. I mean influence of friendship on a professional recommendation letter. As an another example, Applicant A who has good relationship with 20 professors of his department is an ideal academic with professional relationships at workplace. BUT applicant B who has serious conflicts with most of his colleagues (professors of his department), but having only three friends among his department professors will get better recommendation letters. Those three professors will write recommendation letters based on the applicant strengths by ignoring his weakness in the light of their friendship.
In a typical example, if someone has three socially close friends (including current colleagues, coworkers, past professors), then, his applications are always supported by strong recommendation letters.


No, that's not what "strong recommendation letter" means.

First, strong recommendation letters do not simply state the author's high personal regard for the student, but provide specific, personal, and credible detail supporting the applicant's potential for excellence.  I don't just want to know that someone thinks you'll succeed—I assume they wouldn't write you a letter if they thought otherwise.  I want to know why.  I want compelling evidence, not mere opinion.

Second, recommendation letters have more weight if they come from credible sources.  At a minimum, the author should work at a credible academic institution.  The best letter writers are themselves experienced, visible, active researchers, with documented experience mentoring and/or selecting candidates for admission/hiring/promotion at departments similar to the candidate's target.  For faculty promotion in my department, letters are essentially required to be from full professors, preferably in named/endowed positions, in top-10 computer science departments, and there is a strong preference for ACM/IEEE Fellows, NAE or NAS members, and major award winners (Turing, Gödel, Dijkstra, Gordon Bell, etc.).

The intersection of these two aspects of strong letters is direct comparisons with the applicant's peers.  An ideal PhD recommendation letter for my department includes sentences like "Among the 13 undergraduates I have mentored who went on to top-10 PhD programs in computer science, I would rank [applicant] roughly 3rd, well below [famous person who proved P=NP], but on par with [successful person] at MIT, [successful person] at Stanford, and [successful person] at CMU."