How to Make Decisions Under Pressure: What Stress Changes

Abstract

This article is about how to make decisions under pressure, and what stress changes about the way people weigh risk. Three pieces of research bear on it. A selective review by Starcke and Brand (2012) concluded that stress influences decision making, and that whether it helps or harms depends on the task and the situation. An experiment by Porcelli and Delgado (2009) found that stress strengthened the reflection effect: people were more cautious with possible gains and took more risk with possible losses. A field study of male traders in the City of London (Coates and Herbert, 2008) linked cortisol with the variance of trading results and with market volatility. Most of this research used laboratory stress or a trading floor, not a finance close. The three steps at the end are practical readings, not tested methods, and this article is not medical or financial advice.

Twenty to six on the last day of the close

It is twenty to six on the last day of the close. Group wants an answer on whether to book the accrual or leave it for next month. The auditor's email is open on one screen. The CFO's message says: "Need a call by six."

Your heart is beating faster than the situation seems to justify. You notice that you want to pick whichever option ends the conversation soonest. You are not sure whether that is judgement or relief.

What changes when you make decisions under pressure?

Pressure at work is a mix of time limits, stakes and other people's expectations. Most of the research on it studies acute stress, which means a short, intense stress response, often created in a laboratory. A hand in ice water is not a close, so the findings below describe tendencies in groups of people, not what will happen to you on a given evening. None of the studies tested the three steps at the end. The next three sections cover what each study found.

What a selective review found about stress and decisions

Starcke and Brand (2012) reviewed studies published from 1985 to October 2011, found through PubMed and PsycInfo. They focused mainly on acute stress induced in the laboratory, where researchers measured both how people decided and how their bodies and minds responded to the stress. They also covered decisions under naturally occurring stress.

The authors concluded that stress does influence decision making. Whether it helps or harms the outcome depends on the task and the situation, and other variables change the effect. This is summarised from the published abstract.

Read the scene through this. Whether the pressure of twenty to six will make your decision better or worse cannot be answered in general. This is an inference. The review was selective and mostly laboratory-based, and it does not say what to do at a desk with an auditor waiting.

What an ice-water experiment found about gains and losses

Porcelli and Delgado (2009) ran an experiment on acute stress and financial choices. Participants who dipped a hand in ice-cold water, which induces stress, were compared with a control group who used room-temperature water. Everyone chose between financial gambles, some risky and some conservative.

Under stress, people leaned toward the conservative option when the choice could only produce gains. They took more risk when the choice could produce a loss. The authors describe this as stress strengthening the reflection effect, a known pattern in which people are cautious with gains and risk-seeking with losses. They interpret it with dual-process theory: under disruptive stress, people fall back on automatic responses to risk. This is summarised from the published abstract and a press summary.

Read the accrual question through this. If one version of the decision feels like a loss, pressure may pull you toward the riskier option. If it feels like a gain, it may pull you toward the safe one. This is an inference. The task was a set of gambles in a laboratory, not a work decision, and it does not show how experienced professionals behave.

What a study of City traders found about the body

Coates and Herbert (2008) sampled hormones from male traders in the City of London during real working hours on a trading floor. Higher morning testosterone predicted higher profit for a trader that day. Cortisol rose with the variance of each trader's results and with the volatility of the market, so it tracked risk.

The authors suggest that testosterone may contribute to economic return and that risk raises cortisol. They also speculate that if these hormonal changes lasted or grew with volatility, they could shift risk preferences and impair rational choice. They present this as a possibility, not a tested result. This is summarised from the published abstract and a press summary.

Read your own evening through this. Your body may register risk before you have put it into words. This is an inference. The study did not test whether either hormone changes decisions, the traders were men on one trading floor, and it does not tell you what to do.

Make decisions under pressure: three steps

None of these is a tested method, and none was studied in finance teams. They combine what the research points to with ordinary practice. Where a step goes beyond the research, it says so.

1. Say the decision twice: once as what you gain, once as what you lose. For instance: "If we book the accrual, we lose a clean month-end number. If we leave it, we gain a clean number and risk a correction next month." Notice whether the two versions make you want different answers. Porcelli and Delgado (2009) found that stress strengthened the difference between gain choices and loss choices. This is an inference. They did not test whether restating a decision reduces that difference, and no study cited here tested this step.

2. Write the options, and what would change your mind, before anyone else speaks. For instance: "Option A: book now. Option B: defer. I would change my mind if the auditor confirms the basis, or if the amount is below the threshold." Porcelli and Delgado interpret their results as a fall back to automatic responses. This is an inference. Writing the options may slow that down, but no study cited here tested it.

3. Ask what the real deadline is, and what happens if it is an hour later. For instance: "Is six o'clock when the filing closes, or when someone wants an answer? What changes at seven?" This is a judgement. Starcke and Brand (2012) report that the effect of stress depends on the task and the situation, so the first question is which decision you are facing. No study cited here tested asking about deadlines.

If the deadline itself is the problem, How to Push Back on an Unrealistic Deadline in Finance covers how to raise it. If your body is racing before you can think, The 90-Second Rule at Work: What's True and What Isn't looks at what the evidence says about calming down. For the close itself, there are Month-End Close Stress: Why It Comes Home With You and Year-End Close Stress in Finance: What Wears You Down. And if every decision lands on your desk, How to Delegate as a Finance Manager: Why Work Comes Back is about why.

Questions People Ask

Does stress make you make worse decisions?

Not always. Starcke and Brand (2012) concluded that stress influences decisions, and that whether it helps or harms depends on the task and the situation. The research does not support a simple rule that pressure makes decisions worse.

Should I trust my gut under pressure?

The research cited here does not test gut feeling at work. Porcelli and Delgado interpret their results as a fall back to automatic responses under stress. This is an inference. A fast response may be useful on a familiar decision and misleading on an unfamiliar one, and these studies cannot tell you which you are facing.

Does this apply to investment decisions?

This article is not financial or investment advice. The studies describe how stress relates to risk taking in laboratory gambles and on one trading floor. None of them says what you should do with your own money or with a client's money, and the steps above are for work decisions.

Can coaching help me decide better under pressure?

Coaching is educational support for work patterns. It can help you notice what pressure does to your own choices and practise a routine for the next one. It is not treatment. No study cited here tested coaching for decision making under stress.

When it is more than a pressured decision

A hard evening is one thing. It is more when pressure is constant, when you cannot sleep, when you feel panic, or when you cannot make routine decisions that used to be easy. In those cases talk to your doctor or a qualified mental health professional. For decisions with legal, regulatory or safety consequences, follow your organisation's procedures and take advice from compliance or a qualified adviser. This article is not medical, legal or financial advice. Coaching is educational support for work patterns. It is not treatment and not a substitute for it.

Sources

• Coates, J. M., & Herbert, J. (2008). Endogenous steroids and financial risk taking on a London trading floor. Proceedings of the National Academy of Sciences, 105(16), 6167–6172. DOI: 10.1073/pnas.0704025105 (Summarised from the published abstract and a press summary.)

• Porcelli, A. J., & Delgado, M. R. (2009). Acute stress modulates risk taking in financial decision making. Psychological Science, 20(3), 278–283. DOI: 10.1111/j.1467-9280.2009.02288.x (Summarised from the published abstract and a press summary.)

• Starcke, K., & Brand, M. (2012). Decision making under stress: A selective review. Neuroscience & Biobehavioral Reviews, 36(4), 1228–1248. DOI: 10.1016/j.neubiorev.2012.02.003 (Summarised from the published abstract.)