This is why I start with something very simple. If I detect the candidate is getting paralyzed with nerves, I'll reassure them and give little hints to help bring them out of it. After successfully completing a simple exercise, they usually feel more confident and relaxed. Only then will I give them a more challenging problem, with the caveat that I'm mostly interested in seeing how they might approach the problem and what things they can tell me about it. If they solve it, great. If they don't, did they show an ability to reason about the problem well, or identify key aspects of the problem that make it challenging? Can they communicate their thoughts as they think about it?