11May2026
Every leader has made a decision that felt right in the moment, but wrong in hindsight. Not because they lacked information, but because of the conditions in which the decision was made.
In business, decision-making is often seen as a product of expertise and intelligence. The assumption is simple: the more you know, the better decisions you make. But if that were true, leaders with access to the same information would reach the same conclusions. Organizations would avoid repeating mistakes. And people would consistently act in line with their long-term goals. In reality, they don’t.
Decisions are rarely driven by knowledge alone. They are shaped by stress, emotion, and cognitive biases. All of these are rooted in biological systems that evolved to help us survive, not to lead organizations.
This is where neuroscience offers a useful perspective shift. Instead of asking who makes the best decisions, we should ask: under what conditions do good decisions become more likely?
How Stress Affects Our Judgment
Poor decisions are not always the result of poor thinking. Often, they are the result of thinking under conditions that compromise our judgment.
From an evolutionary perspective, this makes sense. Our brain evolved to respond to threats quickly. When danger is perceived, mental resources can shift toward systems optimized for survival, such as scanning for risk and preparing for fast action. This response was adaptive in environments where survival depended on fast threat detection. But the same mechanisms have become less helpful in contexts that require reflection, creativity and long-term thinking.
Modern threats often look less like actual physical danger and more like time pressure, uncertainty or fear of failure. Yet, the body and brain cannot separate life threatening stressors from these not-quite-as-deadly stressors. To the brain, a threat is a threat. It will respond in ways that narrow perspective all the same.
Under pressure, leaders may become more reactive, gravitate toward familiar patterns, seek certainty too quickly or overvalue short-term control. What feels like a good decision in the moment can feel suboptimal in hindsight. This is because stress affects our thinking.
Research has shown that even mild stress can impair the functioning of the prefrontal cortex. This is the brain area associated with complex reasoning, impulse control, emotion regulation, planning, and – decision-making. When this area de-activates, it’s like the brain switches from smart, logical mode to a more primitive, survival mode.
This shift explains why smart people can make poor decisions under pressure. It’s not because they suddenly become less intelligent, but because pressure changes how decisions are made in the brain.
Why Decision-Making Is Not Purely Rational
Another long-standing assumption is that good decisions are made by minimizing emotion. If we just focus purely on the facts and remove emotion from the equation, we can make logical decisions, right? Well, not exactly.
Neuroscientist Antonio Damasio’s work has famously challenged the idea that emotion interferes with sound judgment, showing instead that emotional processes often help guide it. He has described patients who have suffered brain damage to areas involved in emotional processing, and says that some cannot even decide where to go for dinner. Without emotion involved, evaluating options can become nearly impossible.
“It is emotion that allows you to mark things as good, bad or indifferent.” – Antonio Damasio
For leaders, this changes the narrative. Good decision-making is not about removing emotion from the equation, but recognizing that it is an integral part of it. It’s best to learn to work with emotions rather than trying to ignore them altogether.
How Mood Shapes Risky Decisions
It may be best to avoid making decisions involving risk when you’re moody. Research has found a link between a negative mood and a greater willingness to take risks. When we feel low, we may (often unconsciously) become more open to choices we might otherwise avoid. For example, one study showed that investors can become more willing to tolerate risk when in a negative emotional state.
One explanation is that people may take more risks as a way of trying to shift how they feel. Risk-taking typically involves both potential positive and negative outcomes, and when someone is in a low mood, the possibility of the positive outcome may feel especially appealing.
Another perspective suggests that regulating negative emotions requires self-control, which is seen as a limited resource. While trying to regulate a negative mood, there may be fewer resources left to resist the pull of potentially rewarding outcomes. The attractive side of a risky choice may become harder to resist when self-control is already taxed.
This is an important reminder for leaders that decisions involving risk are rarely just about external factors; internal states matter too. The same situation can look very different depending on how we feel in the moment. Timing, self-awareness, and emotion regulation can quietly shape the level of risk we are willing to take. But even beyond stress and emotion, there is another layer shaping our decisions.
Why We Are Often Blind to Our Own Biases
Even when stress is low and emotions are stable, decision-making is still not neutral.
Cognitive biases shape how we interpret information. These are mental shortcuts that help us process the world quickly, but they often lead to systematic errors.
For example:
- Recency bias can cause leaders to overvalue recent events
- Confirmation bias can lead us to favor information that supports our existing views
- Loss aversion can make potential losses feel more significant than equivalent gains
These are not exceptions. They are part of how the brain works.
Daniel Kahneman, in his work on judgment and decision-making, famously highlighted this in his book Thinking, Fast and Slow. He highlights that much of human thinking is fast, automatic, and intuitive. While efficient, these processes are also prone to error. The challenge is that they feel correct and we rarely question them.
For leaders, the implication is clear: confidence is not the same as accuracy. Even well-informed judgments can be shaped by biases in our thinking that we are blind to.
If we cannot fully trust our own intuition, improving decision-making requires more than just thinking harder or acquiring more data.
How To Create Optimal Conditions for Decision-Making
If better decisions are not primarily about intelligence, but about conditions, the question becomes more practical: what can leaders actually do to improve those conditions?
Based on what we know from the science of decision-making, there are a few consistent ways to support clearer thinking in complex situations:
1. Avoid making decisions under acute stress
When stress levels are high, thinking tends to become narrower and more reactive. This is useful in urgent situations, but less helpful in complex decision-making. Taking a pause between pressure and action can help to create space for more balanced judgment.
2. Bring in other perspectives before committing
Individual thinking is always limited by blind spots. Involving others (especially those who may disagree with you) helps counteract cognitive biases and broadens the information base. Good decisions are rarely made in isolation.
3. Actively shift perspective
Instead of looking at a decision from just one angle, deliberately ask how it might look from different viewpoints: a critic, a customer, or even a future version of yourself. This helps surface perspectives that may otherwise stay hidden.
4. Make the invisible visible
Before finalising a decision, it can be useful to explicitly ask yourself: what might be influencing my choice? This could include emotions, recent experiences, external pressure, or personal preferences. Simply listing the contributing factors can reduce their unconscious influence.
5. The classic advice: sleep on it
The more impactful the decision, the more time it deserves. Time allows emotional intensity to settle and thinking to reset, which often leads to a more balanced evaluation of risks and opportunities. Revisiting a decision after a delay can help shift perspective and reduce the influence of immediate reactions.
There’s a reason the advice “sleep on it” has stood the test of time. Sleep supports cognitive recovery, helps regulate stress, and creates the mental distance needed to see complex decisions more clearly.
Better Decisions Are Made, Not Found
The quality of our decisions is not only a reflection of how we think, but of the conditions in which we think. None of these practices alone can guarantee better decisions, but together they increase the likelihood that your decisions are shaped by reflection rather than reaction.
Once we accept that the conditions in which we make decisions are just as important as the knowledge we base our decisions on, decision-making becomes something we can actively improve, not just something we hope to get right. It becomes less about having all the answers, and more about creating the conditions in which better answers can emerge.
Want to Learn More about Effective Decision-Making?
Next September, at Nordic Business Forum 2026 we will focus on the Human Edge – also through the lense of decision-making. 11 of the world’s top leardership and business experts will share their secrets to help you strengthen your human edge in the age of AI and automation.
All 8,500 in-person tickets to NBF 2026 are now sold out, but you can still join the event online!
Resources:
- Arnsten, A. 2009. Stress signalling pathways that impair prefrontal cortex structure and function. Nature Reviews Neuroscience.
- Bruyneel, S. et al (2009). I felt low and my purse feels light: Depleting mood regulation attempts affect risk decision making. Journal of Behavioural Decision Making.
- Damasio, A. 1994. Descartes’ error: Emotion, reason, and the human brain. Grosset/Putnam Book.
- Kahneman, D. 2011. Thinking, fast and slow. Farrar, Straus and Giroux.
- Kliger & Levy. 2003. Mood-induced variation in risk preferences. Journal of Economic Behavior & Organization.
- Interview with Antonio Damasio: When Emotions Make Better Decisions
