The Invisible Hand of Stress in Decision-Making

This is the second essay of a series addressing the biology of performance.

Updating our understanding of decision-making for the 21st Century.

In 1978, Herbert Simon accepted a Nobel Prize for Economics. Part of his award was for recognizing that organizational decision-making falls down in complexity.

In 2002, Daniel Kahnemann won his Nobel in Economics, for expanding on the theories of Herb Simon. Kahnemann who had researched ideas with Amos Tversky, used a metaphor of ‘fast’ and ‘slow’ thinking to show faulty decisions occur in both fast and slow processes though there seemed to be more errors when we rush.

The research by the above laureates was based on observations - by watching behaviors.

Since the mid 1990’s with the advent of the fMRI, scientific sleuthing could watch real-time neural processing. By doing so, we found greater insight as to the impact of stress on our decisions.

Stress within the body shifts our biological soup – hormones, neurotransmitters, genetic/epigenetic factors, brain health, and physiological states.

Often invisibly to us, stress hijacks attention. It tilts perceptions. Even mild stress rapidly impairs complex, flexible thinking.

Our biochemical soup shifts before observable behaviors. We often overlook it.

Stress compromises our thinking. This derailment occurs in both Kahneman’s fast and slow systems. Most of us can find evidence of this if we do a post-mortem on our everyday decisions.

Fast thinking means quick reactions. Our reactions can occur in as little as 13 milliseconds. For us to process a thought, it can take 180-200 milliseconds.

How are these reactions so fast? It’s because we assume prior experiences hold true for present circumstances. We project our subjective past onto a potentially dissimilar present. Then without consciously recognizing what we are doing, we cherry pick information to justify these fast reactions.

Because we are using data from our memory instead of seeing what’s in front of us, this is dissociation. Research tells us that it is surprisingly commonplace – we dissociate on average 50% of the time. And it increases with stress, threat or poor mood according to Dr. Amishi Jha.

I asked AI to help out with ‘recognized cognitive distortions from stress’.’ The results:

1. Catastrophizing Expecting the worst-case scenario to happen, even when it's unlikely. For example, assuming a small mistake will ruin your entire career.

2. Black-and-White Thinking Seeing things in extremes, with no middle ground (e.g., "If I fail this task, I’m a complete failure").

3. Overgeneralization Drawing broad conclusions from a single event (e.g., "I was rejected, so I’ll never succeed").

4. Emotional Reasoning Believing that feelings reflect reality (e.g., "I feel anxious, so I must be in danger").

5. Filtering Focusing exclusively on negative details while ignoring positive aspects of a situation.

6. Mind Reading Assuming you know what others are thinking, often in a negative way (e.g., "They probably think I’m incompetent").

7. Fortune-Telling Predicting negative outcomes without evidence (e.g., "This project will fail, so why bother?").

8. Personalization Blaming yourself for events beyond your control or taking things too personally (e.g., "It’s my fault the team didn’t meet the deadline").

9. Should Statements Rigidly imposing unrealistic expectations on yourself or others (e.g., "I should be perfect").

10. Discounting the PositiveMinimizing accomplishments or positive feedback (e.g., "That compliment doesn’t count—they were just being nice").

These distortions are common under stress because the brain prioritizes reactive, survival-focused thinking, which often bypasses rational analysis.

To mitigate stress’s invisible influence:

1)    Recognize stress signals

2)    Manage stress hormones

3)    Breath/Sleep/Exercise/Eat healthy/Relax

4)    Apply mindfulness techniques

5)    Practice resilience-building

6)    Learn your own biases and challenge them

7)    Use systems-thinking

8)    Bounce ideas off a trusted advisor

We can learn to manage the invisible hand of stress. Please reach out for more information.