Really whenever we have a new song, we play it live to test it out. If the response isn’t as good as we’d like, we gradually weed out the chaff. You also want a live set to be a bit varied: different tempos, different keys, different time signatures if possible. And finally, you want a live show to be energetic, so not too many ballads obviously. So all that influences the setlist.
We don’t really record anything we can’t play live. And even if it doesn’t sound exactly like the recording, that’s fine. I prefer a live version to sound different from the recording anyway – otherwise you can just stay home and listen to the recording, right?