September 2024.
I’m in Washington, D.C., about to open an all-day roundtable that an industry peer and I have spent over a year planning. Colleagues at work have put considerable effort into the logistics.
The stakes feel high. I want this to go well.
We’ve gathered twelve chief investment officers from across the money-management world. The institutions represented around the table oversee trillions of dollars.
The conference room is ready. A long wood table fills the center. Along one wall, a self-serve breakfast sits on white tablecloths: silver coffee urns, porcelain cups, miniature pastries, fruit, eggs, and bacon.
Men and women in suits stand in pairs or small groups, balancing coffee and breakfast plates. They talk about markets, flight delays, and the usual things people discuss before a professional event begins.
I’ve prepared my introduction. I’m anxious and excited at the same time.
Five minutes before go time, my phone rings.
I don’t recognize the number. The Maryland area code tells me this is probably not a junk call.
“Mr. Page?”
“Yes?”
“This is the McDonogh School nurse. Your daughter Olivia is here, and we have an emergency.”
My heart rate jumps.
“We’ve been trying to call your wife as well.”
Anne is at CrossFit. It is the only hour of the day when she rarely picks up.
“Olivia ate something with peanuts.”
I hear her crying in the background.
Olivia has a peanut allergy. It is not airborne, but it is severe enough that she carries an EpiPen.
“We’ve given her Benadryl,” the nurse says. “Her lips are swollen, and her breathing is fast.”
Then she adds, “Her throat may be a little swollen and red.”
That last sentence is no joke. Throat swelling can turn an allergic reaction into a life-threatening emergency.
“I’m about two and a half hours away,” I say.
Then the question comes. It sounds like, and could very well be, a life-and-death question.
“Do we give her the EpiPen?”
An EpiPen is an auto-injector that delivers a measured dose of epinephrine, also called adrenaline, into the outer thigh. Epinephrine can reverse the dangerous symptoms of anaphylaxis, a life-threatening allergic reaction that can include trouble breathing, while emergency help is on the way.
It doesn’t feel like a minor intervention. I have to choose between injecting epinephrine into a frightened child whose reaction may remain mild, as several have before, knowing it can cause a racing heart, shaking, and requires an immediate trip to the hospital, or waiting while the swelling in her throat may be getting worse.
“But you’re the nurse?”
“Mr. Page, we need a parent to make the decision.”
I assume this has something to do with legal liability.
Either way, the decision is now mine, and I have seconds to make it.
Daniel Kahneman describes two modes of decision-making in his bestseller Thinking, Fast and Slow.
System 1 is fast, automatic, intuitive, and often emotional. You’re making decisions with your gut. This system is prone to biases and can lead to bad decisions.
System 2 is slower, effortful, and deliberate. It gives your initial emotional response time to pass and can reduce some biases. In The Psychology of Leadership, I make a related case for strategic patience, which is surprisingly rare in business. When a decision can wait, keeping your options open often leads to a better outcome. There is even a mathematical proof supporting that conclusion.
Bottom line: there’s a lot to be said for slowing down your decision-making process.
But the phone call I just received is an emergency. System 1 is all I have. And guess what? Stress can sometimes improve judgment.
In one experiment, researchers had participants place a hand in ice water while being socially evaluated. Participants were then asked to make a series of decisions. These stressed participants learned the payoffs of their decisions faster and therefore made better decisions under uncertainty than the non-stressed control group. Take that, System 2!
Another famous experiment involving decisions with variable payoffs found that gut decisions are sometimes superior to intellectualized ones. Participants developed emotional warning signals about bad choices before they could consciously explain why. Emotion can carry information acquired through experience. In that context, an intuitive response (System 1) may beat a slow decision (System 2).
And to be clear, Kahneman did not dismiss System 1. He viewed it as fast, efficient, and capable of skilled judgment when experience has trained the mind to recognize reliable patterns. Its weaknesses appear when emotion takes over, or confidence exceeds expertise, or the environment is unpredictable.
Lastly, here’s a business leadership caveat about slow decisions: bureaucracies can turn deliberation into a competitive disadvantage. Additional meetings, approvals, and requests for information can delay a decision until the opportunity disappears.
I’m not going to set up a Steering Committee with Taskforces and Workstreams to make the EpiPen decision. No consultant will be involved either.
I ask to speak with Olivia. She is panicking. Her answers come through tears and fast breaths.
The nurse gets back on the phone.
I’ve made my decision.
“Give her the EpiPen,” I say.
A lot happens within the next hour. An ambulance takes Olivia to the hospital. Anne sees the missed calls and gets to the hospital quickly. Olivia calms down. By the time we talk again, she is laughing it off. Everything will be okay.
Teenagers have an impressive ability to move on from situations that take years off their parents’ lives.
I speak with the doctor by phone. He explains what is happening medically and tells me that Olivia is doing well.
Then I ask the question that has been nagging at me.
“Did I make the right decision with the EpiPen?”
His answer is balanced.
“Look, given her relatively mild symptoms, I would not have given her the EpiPen.”
Oh, I think. I was wrong.
“But that would have been my decision if she had already been here at the hospital. She was far enough away that the EpiPen was most likely the right decision.” I manage risks for a living (in my case, financial risks). I understand what he means.
Epinephrine is the first-line treatment for anaphylaxis. Current allergy guidance also says that a reaction does not have to satisfy every formal diagnostic criterion before epinephrine is used when the clinical situation warrants it.
Twelve chief investment officers are waiting in Washington. Trillions of dollars sit around the table. My mind remains with one frightened teenager in a school nurse’s office.
Love for our children clarifies the objective function. Protect them first. Review the decision later. Kahneman might even approve.
For the rest of the day, several trillion dollars feel trivial. A rounding error beside my daughter’s safety.
(Buy my book here: The Psychology of Leadership)
Endnotes
Kahneman, D. (2011). Thinking, Fast and Slow. Farrar, Straus and Giroux. Kahneman describes System 1 as fast, automatic, and intuitive, and System 2 as slower, effortful, and deliberate.
Page, S. The Psychology of Leadership. Principle 12, “Sit on It—Learn Strategic Patience.” The chapter applies control theory to decision-making and argues that leaders should preserve their options when time allows.
Byrne, K. A., Cornwall, A. C., & Worthy, D. A. (2019). “Acute Stress Improves Long-Term Reward Maximization in Decision-Making Under Uncertainty.” Brain and Cognition. The researchers found across two experiments that moderate acute stress improved learning when participants had to sacrifice immediate rewards to maximize long-term gains.
Bechara, A., Damasio, H., Tranel, D., & Damasio, A. R. (1997). “Deciding Advantageously Before Knowing the Advantageous Strategy.” Science, 275(5304), 1293–1295. Participants developed anticipatory physiological responses to disadvantageous choices before they could consciously describe the strategy.
American College of Allergy, Asthma & Immunology. “Epinephrine Auto Injector.” Epinephrine, also called adrenaline, is the first-line treatment for anaphylaxis and works to reverse life-threatening symptoms.
American Academy of Allergy, Asthma & Immunology. (2023). Anaphylaxis in Practice: A Guide to the 2023 Practice Parameter Update. The guidance states that formal diagnostic criteria need not be met before epinephrine is used when the clinical situation warrants it.
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