Episode 348

Peter Atwater on Confidence in Economics, Leadership and More

The Elevate Podcast with Robert Glazer | Peter Atwater | Confidence


Peter Atwater is one of the world’s leading experts on confidence and its role in decision-making. He is a professor of behavioral economics at William and Mary and the author of a new book, The Confidence Map, published this year. Peter has a unique background, transitioning from a successful career in financial services to focus on studying confidence. He is a sought-after speaker and has been featured in Bloomberg Television, The Financial Times, the Wall Street Journal, and Time Magazine. Peter joined host Robert Glazer on the Elevate Podcast to discuss The Confidence Map and how confidence factors into leadership, economics, decision-making, and more.

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Peter Atwater On Confidence In Economics, Leadership, And More

Welcome to the show. Our quote for this episode is from Mark Twain, “Confidence is the feeling you have before you understand the situation.” My guest, Peter Atwater, would probably disagree with Mr. Twain. He’s one of the leading experts on confidence and its role in decision-making. He is a professor of Behavioral Economics at William & Mary and the author of a new book, The Confidence Map, which was published this 2024. Peter has a unique background having transitioned from a successful career in financial services to focus on studying confidence. He’s a sought-after speaker and has been featured in Bloomberg Television, the Financial Times, the Wall Street Journal, and Time Magazine.


The Elevate Podcast with Robert Glazer | Peter Atwater | Confidence


Peter, welcome. It’s great to have you back on the show.

It’s great to be here. Thank you so much.

We dug into your background on your previous episode on the show, which I encourage people to check out. It’s episode six. It’s one of the very early ones. I hope we’ve both upgraded our talent and our equipment since then. Given that, I like to ask people because that was at the end of ‘99 or early 2000. How has your life and work changed since 2020?

Since COVID, what has changed the most is priorities in terms of how I’m spending money. It’s about experiences rather than stuff. That’s a broader theme than my own life. COVID has reminded us that we are meant to be out and about in the world with others and doing things that are a lot more interesting than accumulating stuff.

You’re also reinforcing the pattern of why anything that is stuffed is 25% off. Airline tickets are extraordinarily expensive as the economy has shifted from hard to soft goods.

The only time I saw stuff expensive was trying to get a dishwasher in 2021 and there were none to be had.

Unprecedented Events Are Predictable

I was finishing listening to Morgan Housel’s new book, Same as Ever, in which he talks about what are the things that don’t change among all the changes. One of the things he had is calm breeds chaos, which connected into this question I was going to ask you. In the year since your last appearance, we’ve had a lot of truly surprising events that are called unprecedented. We’ve had wars, a pandemic, and weather. I know you tend to believe that unprecedented events are often predictable if you know where to look. Could you dive into that a little bit more and maybe use some of these events as an example?

Unprecedented events are often predictable if you know where to look.

Unprecedented is a word that we only grab hold of when confidence is really low. As I was doing the work on my book, I was fascinated to see that we saw it skyrocket during 2008 in the financial crisis when banks, CEOs, and homeowners were talking about the unprecedented collapse and home prices. We saw the same thing with COVID and the response to that.

A pandemic’s really not unprecedented if you’re a student of history.

What preceded both events was a real sense of invulnerability. You saw that before 9/11. You saw that before the financial crisis. You could feel the pre-pandemic moments. We forget that it’s those moments of invulnerability that always trip us up into something. I’m not saying it’s a war, a financial crisis, or a pandemic, but we need to be much more aware of when we feel powerless and things feel extraordinarily certain because the pendulum has a funny way of moving violently to the other side.

We need to be hyper-aware of when we feel powerless and things feel absolutely certain. Sometimes, the pendulum swings violently in the other direction.

Is overconfidence the problem when everything is calm or when people are building billion-dollar headquarters and they think that it’s good and it’ll always be good?

I don’t like the term overconfidence. I much prefer the term invulnerability. If you think of confidence as the opposite of being vulnerable, then what you really have when we’re overconfident is a sense of extraordinary power and extraordinary certainty. When we double dip like that, we become blind. I truly believe there’s a causation of blindness that comes with us. Since we’re feeling so good, there’s no need to scrutinize anything. Our brains are naturally lazy.


Let me step back. I know we dove right into there. I may have jumped the shark. Let’s define confidence because everyone has a visual of that, a person, or otherwise. What is your definition of confidence in its role in our lives? You explained one that it’s described incorrectly.

Let me cover two things that it’s not. One is it’s not Elon Musk, Beyonce, Taylor Swift, or choosing the CEO of the month. We tend to associate confidence with the performative elements of it. I think of that as confidence theater, so we need to set that aside. Standing like Wonder Woman isn’t what confidence is all about. Nor is it the inward look that came out of the 1960s where we became really focused on self-confidence, self-esteem, and how good we feel about ourselves. As COVID showed, we can have extraordinary self-confidence and not be confident a moment later.

When I think of what confidence is, it’s how we see ourselves faring ahead. That’s an awkward mouthful, but there are three pieces of that that are important. One is it’s a feeling of control. Are we prepared? Have we rehearsed? Have we practiced? It is all of the things that make us ready for what’s coming as well as a sense of certainty. Not only do we know the road is straight, but we know how to drive the car. The third element is when we always forget, which is that it’s always ahead of us. We are inherently forward-looking. When I say I’m confident, I’m not talking about the present. I’m talking about tomorrow, next week, next month, or next year.

Confidence is how we see ourselves fairing ahead.

It’s almost your span of optimism.

I’ll go with that, because that span is also variable. When I am extraordinarily confident, I can see forever. That road is straight and the sky is clear for as long as I’m driving. When confidence is low, it’s really cloudy and I can’t tell which direction the road is going to turn next. You can start to see how our choices begin to mirror the way we are looking at the future ahead of us.

I understand, and Morgan highlighted this, how good times breed bad times because of optimism. How do bad times then breed good times? If you get so myopic and so worried that you’re only planning a minute ahead of you, how is it that the good comes out of the bad? Is it the people that somehow maintain optimism and a future mindset during that and a lot of people don’t come out of that very well?

A couple of things happen. At those lows, there is a true sense of capitulation. I think of the lows as being a measure of defeat. We’ve lost. It’s not that good comes from it. It’s that the bad reaches an extreme.

Where your expectations can only be exceeded?

Yeah, because our expectations are that it’s only going to get worse. Remember. At the extremes in mood, we’re projecting that the trend is endless in the direction it has traveled. At the lows, we only expect it to get worse, so we start to get surprised when it gets better. One of the things that I find is that you have heroes. Those are people who do the unexpected and begin to set the floor for what’s coming ahead.

One of the things that I find particularly if I think about crises and who are the heroes in those crises is they’re the folks who establish the floor. You could think of the head of J&J when they had the Tylenol scare. He pulled every bottle of Tylenol off the shelves. He ended the ability to say, “Things are going to get worse.

When they grounded all the planes on 9/11, they established a floor and said, “There are no more planes in the sky.” They ended that potential feelings of vulnerability. What I see in those moments of extreme lows is individuals or organizations who are ending vulnerability and beginning to build in small steps frequently a basis to rebuild control and certainty around them. It starts small, typically.

Doom Propaganda

We first met and started talking when you were forewarning us of some cracks in the optimism. Everyone was racing to build their billion-dollar headquarters. Money was free. Tech was in its heyday. I feel like we’re at one of these bottoms. Confidence feels incredibly low. We’re going into the end-of-year planning cycle. I talked to a lot of business leaders. They’re planning for another down year or a flat year. There’s no optimism left, it feels like, in certain pockets. After a couple of years of below expectations, that’s become the new norm. What’s your sense of that? Does it feel like we’re at a low level of confidence?

Without question. There has been this bubble in doom.

Doom’s having its day. The news is really good at that, and they have some good events to work with.

The news we choose is good at that.

Do you watch an optimistic or positive news station? Could you tell me what it is that is?

I can’t find it left or right up or down, but I always think that with the media, we have a choice about what we watch and what we listen to.

That’s true. Knowing that it’s negative, your choice to consume a lot of it or consume a minimal amount of it makes a pretty big difference.

What’s so interesting to me is if I look at the economy and I look at the markets, they’re both completely disconnected from the doom that we hear so much about. In fact, there has been a flurry of articles, podcasts, and videos on how extreme the gap has become between how we feel and what the economic data and what the financial data suggests.

The academic and financial data is better than how we feel.

Considerably better. What that says to me is that the gap is about to close. I’m always fascinated when gaps become so extreme that they become newsworthy. Let’s take the probabilities. There are three choices. Confidence rises to meet the economy. There is, in the short run, the potential for that. If inflation is coming down, people should start to feel better about that. Having said that, the next 12 months or 11 months to be more precise are likely to be filled with all sorts of doom propaganda from both the left and the right. It’s like, “If Biden is re-elected or Trump is re-elected, here are the horror stories for you to consume.” That’s going to be a real emotional suck for people. As the polls swing back and forth, you can imagine the crowd getting more riled up by that.

Let me ask you something. Not to get too far into politics, but you said something that clicked in my head. Everyone always talks about how the election is about the economy, stupid, first and foremost. What has confounded the Biden team is that the opinions of the economy or the confidence is much lower than the actual economy objectively. It’s not really the economy. It’s people’s feelings about it. It seems like it’s not the reality. It’s their confidence about it, which could be above or below the reality.

It’s not even the economy, stupid. I don’t think we’re capable of compartmentalizing our feelings of the economy separate and apart from our feelings overall.

Unless you’re an economist.

It’s about vulnerability, stupid. It’s about how powerless and how uncertain I feel.

That’s a good article title. You should publish that. It’s about vulnerability, stupid.


Even more, it’s about stacked vulnerability. It’s about all of the different ways I feel vulnerability. It could be politically, ethnically, and racially and in terms of education and in terms of job satisfaction. You can go through and create a pretty heavy pile for a lot of people, and that pile is what’s forming their views of the economy ahead of them, their financial stability ahead of them. That’s what we’re measuring and seeing in the sentiment data that’s devoid of what we’re seeing in the economic data.

They should get some psychologists on their team. You should do some consulting.

I’m doing a lot of consulting because corporations are really struggling with the disconnect between the data and the feelings.

The Confidence Map

You’re saying even as conflation comes down, it becomes this boogeyman thing that their fear of it is still high, and until that changes, it will be less of a fear. That makes sense. This is a good time to transition into your new book, The Confidence Map. You’ve been talking about a lot of these concepts for a while. What inspired you to write the book, and what’s the new central idea that brought it all together for you?

What inspired me to write the book were my students. I’ve been teaching a class on confidence in decision-making for more than a decade. I thought I was teaching a class on group decision-making and how collective feelings impact the economy, politics, culture, and broad group choices. What my students said was this class had helped them at an individual level and that it had reframed how they look at panics and how they look at overconfidence in their own life experiences.

I decided it was time to put this into a book that would be useful. I’m an economist in terms of my classroom, background, and finance, so it’s framed in terms of business decision-making and financial decision-making, but I think of those more as metaphors and stories for decision-making more broadly. What was new was the framework that I developed to enable people to see the connections clearly between how we feel, what we want, what we do, and the stories we tell. That was where I really had to go back and figure out what this confidence thing is. By framing it in terms of certainty and control, I then had a very simple 2×2 box chart of high and low certainty and high and low control. That framework suddenly allows you to say, “If I’m feeling high certainty and high control, I’m in this thing called the comfort zone. When I’m in the comfort zone, things feel easy. My brain is relaxed.” We can start to associate a lot of what we do simply to location. It’s almost as if these are different countries, and as a result, we act, we speak, and we dress very differently depending on our location.

It’s comfort and certainty.

It’s control and certainty. In the four boxes, when I have both, it’s the comfort zone.

That’s the upper right. What’s the lower left?

Lower left is the opposite, which is low control and low certainty. That’s the stress center. Whenever we have little of both where we feel powerless or things feel uncertain, there’s a level of anxiety that goes along with it. I would even go one step further to say that in that lower left hand corner, it’s where all traumatic events in our life take place.

Whenever we feel powerless or things feel uncertain, there’s a level of anxiety that goes along with it.

A pandemic is the definition of low control and low certainty.

We forget that in those moments, we are much closer to the bottom than we realize. When we think things are going to get worse, it’s like, “Things have already gotten worse.”

What occurred to me too is that after the pandemic, there’s been such supply and demand shocks that even businesses that were doing well or otherwise, the control and the certainty. When you think about supply chains, even if your business is doing well, it has been non-existent. It probably hasn’t felt good even if it was that you were doing well.

You had organizations over respond to that lack of certainty and control in their shift from just in time supply chains to in case. It’s the whole onshoring movement. These were always, “How can I take control in this environment that feels uncertain?” Let me touch on the other two boxes because we don’t think they exist, but they’re really important. One is the environment of certainty but no control. I call that the passenger seat. If you’ve ever taught your kids to drive, you know that that environment can easily go from feeling calm one moment to another.

You know exactly how to drive a car, but you are not in control of it.

If you’ve been on an airplane where there’s been turbulence, you can feel the change in feelings. The lower right hand corner would define a maximum security prism. It’s total certainty but absolute powerlessness.

You had a map of this that I thought was instructive of the pilot versus the passenger on a plane in the book. I thought it was interesting.

In teaching, I use the Flight example a lot. As I was pulling the book together, I said, “Let me ask a pilot.” I have a couple of friends who are pilots. One of them jokes, “It’s called Tuesday. When we have an aborted landing, we don’t even call them aborted landings. We call them go-arounds.” You can see the value of preparation and rehearsal in the way they handle that. They’re very calm when we in the back of the plane are terrified.

That’s an interesting point. I don’t know if you’ve read The Psychology of Money. That was Housel’s initial book. He talked about this barbell. He said, “Forecasting is useless. Preparation is what you need.” How much of being in that lower left is a response to overextending yourself with no rainy day fund? Can we change the environment by changing what we do in the times when they’re in the upper right? It would seem that at face value, if I’m suddenly facing a bunch of challenges with no reserve plan or if I’m doing it with a bunch of cash, that would be a very different scenario.

Risk Management

I’m a huge fan of Morgan. Morgan was very kind in reading my book early and offering a really lovely blurb for it. He’s spot on. I reframe what he says when I talk about risk management, which is planning for what you can imagine but being prepared for what you can’t. We forget that anytime we’re thinking of the future, we are imagining. We’re drawing cartoons of what’s ahead. I got yelled at by a psychologist when I was talking about forecasting and predicting. He was like, “We are imagining. There’s no basis for the future other than imagination.”

Risk management is planning for what you can imagine but being prepared for what you can’t.

There’s no one in the world that predicted COVID-19, the Ukraine war, and Israel-Palestine in the timeframe. They could have maybe gotten 1 but all 3. You could be prepared or unprepared for the logical consequences of events like that.

Effective risk management is that. What you see, if you look at the way organizations go through risk management, is that as confidence rises, they drop being prepared for what they can’t imagine. In fact, it’s worse than that. Rising confidence enables us to build these really tall Jenga towers in which we begin to pull out blocks because we’re trying to create greater efficiency because we don’t think we need them. We’re not realizing that cumulatively, we’re setting in place a faltering tower that inevitably the slightest shock is going to send crumbling. That’s why so often, you see us go from the upper right hand corner to the lower left hand corner in a flash.

One of the quotes was that, “The biggest risk to us is the one that we don’t know or anticipate.” The ones we can conceive of, we’ve managed or thought of a plan around.

When I’m talking to business leaders, it’s, “What can’t you imagine right now happening?” It’s to put it in the imagination phrase as opposed to the predictability or forecasting mindset because you have to think really creatively about what might happen.

There’s discussion that Bill Gates always had a year of cash to survive, no revenue. You can’t anticipate what would happen. You could probably anticipate logical consequences of an exogenous shock. If there are financial consequences, then your ability to have time to make a decision without pressure is going to dramatically impact your confidence. If you’re super over leveraged and stuff like that, understandably, your confidence is going to be low.

That’s a key takeaway from this. If you want to put yourself in a position to be more in the center in that box when the unexpected survives, you need to have some backup plan. You might not know what’s going to hit you, but there are a whole bunch of things I couldn’t expect that would take my revenue to zero. The question is whether I could survive my revenue being at 0 for a week, a month, or 6 months, right?

Yeah. There’s an exercise I take business leaders through. To your point, we spend a lot of time fixating on the causes. It doesn’t matter. Earlier, I said every traumatic event puts us in the lower left hand corner. I’ll start the discussion with leaders to say, “You’re in this left hand corner. Why? Ignore the cause, but what does it look like?” To your point, revenues dropped and clients have quit. It’s like, “Let’s come up with a list of all the crap that’s going to hit the fan when you’re here no matter the reason that puts you there.” What you start to see is the cause is irrelevant. The consequences are always the same.

Inoculate against the consequences rather than trying to guess the cause.

People talk a lot about, “Be confident. Have confidence.” Recognize that particularly, as a business leader, you’re going to be in every one of these boxes routinely. What’s your plan for when you’re in the lower left hand box?

It’s like, “The stock market might fall 50%. I might have all the confidence in the world that it’s the best time to double down and invest all my money, but I might not have any to invest.”

As a business leader, your people are looking to you to lead in those moments. If you’re paralyzed by it, you’re not going to be effective.

As a business leader, your people are looking to you to lead in those uncertain moments. If you’re paralyzed by it, you’re not going to be effective.

That’s a really interesting segue too. I was asked this question. I gave my own answer on it and the person was like, “We’re coming up to the end of the year. We’re coming up to budgeting. It feels like a lot of companies are going to be cutting back, trimming, and doing stuff. Should they be honest with employees about where they are? Should they have a false sense of rallying them?”

I’m always fascinated by the Stockdale Paradox. It’s a really good framework that Jim Collins came up with. As a leader in terms of projecting confidence, part of that was I don’t know that it’s a leader’s job to give people certainty. They should be giving them optimism and the truth. A lot of people are trying to be like, “We need to say stuff to make people comfortable in an uncomfortable world.” I don’t think that’s the leader’s job.

A Leader’s Job In Uncertainty

People can read right through it. A leader’s job certainty requires authenticity, immediacy, completeness where you’re giving the whole story, and realism. It is what it is. Particularly, leaders need to anticipate that if you fail to deliver those, social media will deliver them for you. Your ability to create fiction and the fiction that you think is in their best interest is null and void. What you need to do is to recognize that you need to be much more honest. Yet, at the same time, you better have a plan that moves the organization forward.

Let’s say that a leader knows that if they don’t reach a certain financial objective, they’re going to have to cut 10% of the company. It’s the reality of the math. They’re sitting there looking at it. There’s the angel and demon on their team. One is like, “We can’t tell people this because they’ll be scared. They’ll run away and they won’t do good work.” There’s the other one that says, “We don’t need to threaten people, but we need to make them aware of the reality and tell them what they could do. We can’t escape reality. This will be the logical consequence if we can’t improve this.” How would you weigh in on that with a confidence framework both from the leadership and then down to the team?

The 5 Responses

The moment you start laying people off, you create uncertainty for everyone else. To ignore that reality is fraught with all sorts of peril. Let’s talk about the consequences of that uncertainty. You’re going to get five responses. You’re going to get Fight, Flight, Freeze, Follow, and Fuck it.

You have that framework.

You better be ready for all five of them. If your goal is Follow, you have to give people the incentive to follow you or they’re going to start to follow the people around you to your peril.

One of the concepts in the book, and I know we’ve been talking about this for a while and we’re well ahead of the curve on this, is this Me Here Now decision-making framework. Can you talk about how that influences our choices and some strategies for optimizing it or working with it?

When we lack confidence, it’s as if the world in front of us is very foggy. What that does is to reprioritize what matters to us. You said, “I become much more focused on myself as opposed to others. I’m naturally more xenophobic. My time preference is now as opposed to the future. My geographic preference is right here as opposed to things that are far away.” The last piece of it is, “I have a strong preference for things that are concrete versus abstract.” Psychologists use the term hypothetically. I hate the word, but think of it in terms of, “I need things that are much more concrete than potential and possible and require cognitive processing that I don’t have the bandwidth for.

It seems like you’re describing 2023 perfectly. This leads to the rise of populism. I heard you first presented this a few years ago. You talked about this canary in the coal mine election where this guy in Pennsylvania lost his primary because he was focused nationally and he lost it locally. Was that Eric Cantor?

In Virginia. Yeah.

That has fully come true. We see a rise in populist authoritarian leaders all over the world.

There are cultish figures who are promising certainty and we fail to appreciate that their ideal environment is us being powerless. We need to do a better job.

If they’re authoritarian and powerless, then there is a lot of certainty.

Me Here Now mode impacts everything from financial decisions to political decisions. You see its impact on the economy. We should be honest. We have an entire business environment that is very Me Here Now from streaming video to K-cups to iPhones. Technology in business has adapted brilliantly to our Me Here Now behavior. You could see it even exaggerated more during COVID. If I’m a leader, all my messaging needs to be in Me Here Mow mode too. Talking about what might happen a year from now or where we’re going to be five years from now is a waste of your time. It’s like telling a kindergartener.

It’s super dangerous. I went to a Harvard Business school seminar with my daughter on populism. They showed examples throughout history. You can’t determine the 1 from yesterday from 400 years ago and all to say, “Only I can solve all of your problems right now.” That is the summary of the language.

We have folks who have mastered Me Here Now communication. If you are in that arena, you have to match it. That said, you can match it with language that is Me Here Now, but is empowering as opposed to authoritarian. If I think about effective noble leaders in crises, what they do is to empower, coach, lead, and encourage others to success. Think about how you can put your organization on the hero’s journey. How did they succeed? It’s their success that ultimately you need to achieve in order for your organization to grow and thrive.

Effective, noble leaders in crises empower, coach, and guide others to success.

Better Decision-Making

This is another one pulled out of the book that you talk about that’s super hard. Can you talk about the concept of having psychological distance from a decision? The more objective, the better our decision-making, but that’s hard. Talk about this one if you have an example that would be probably helpful.

I think about it in the context of investment decisions all the time because investors personalize those decisions. If you look at the decision to buy or sell, it’s typically associated with probabilities. We buy when we’re certain that things are going to go up, and we sell when we’re certain they’re going to go down. What we need to do is to step back to say, “The more certain I am of the outcome, the more I’m diluting myself. Anytime I ascribe an 80% or 90% odds of success or failure based on the choice I’m making, I’m kidding myself. I’ve over assigned probabilities.” It’s always helpful to make it a coin toss. That coin toss helps you to also think, “What should I be doing to be prepared if it goes against me? What are some of the early signs?”

That’s why stop losses are good. Smart traders use stop losses, which is they buy a stock and say if it falls 10% or something like that, automatically sell it because it gets them out of a bad decision. People wait twenty years for it to come back.

You see the same thing at the poker table. One of the points Annie makes is professionals quit far faster than amateurs. They’re in the business of assigning probabilities. If the probabilities aren’t good, they’re out. We as the amateur hold on to our imagined probability. I always think it’s useful to remember that most of our decision-making is assigned probability of outcome driven. Meaning, we imagine the outcome and then act based on the one that we imagine.

There are other facts that come into play that apply more than our logic. I’ll give you an example where it probably falls under this where I have lost a ton of money. A couple of years ago, I was reading a lot of stuff and looking at the transition to renewable energy and the things that I thought were going to change pretty dramatically. I identified a handful of companies that I thought would be at the forefront of that and I bought them.

You’re getting to the point where it’s almost like every year, you install as much as was there. I’ve gotten crushed on all of those investments even though the thesis will turn out to be right and may even be right. The reason is they were too expensive. People had taken every possible winning and confidence of it going perfectly and already discounted it into present value.

My belief that those things and certainly those things were to happen, ironically, the over certainty had already been priced into all of those stocks. There’s a complete disconnect between will these companies commercialize their products at the rate that I expected, which has happened, and is that already valued or not valued in the stock price?

I tell investors, “What you think is irrelevant. What you need to do is to think about the psychology of the crowd. How are they feeling?? We’re terrible judges of our own sense of confidence. It’s a lot easier for me to judge where the crowd is on Bitcoin or the crowd on energy. I can quickly conclude where the sentiment of others is, and that’s where my attention needs to be.

This is true not only for investors but for folks in the C-Suite. Your success as a business leader is going to be determined by the confidence of those around you, not your brilliance. The most successful executives follow what their clients are asking them to do and what their clients need. I find this disease that takes hold in C-Suites is successful business leaders start out by responding to the crowd by fixing a problem that others have. They get really good at that, and then they stop listening. They think, “I’m a genius, so now the crowd needs what I want.” It’s like, “No.”

Your success as a business leader is determined by the confidence of those around you, not your brilliance.

Only Steve Jobs can figure out what people want without him telling them.

Look at his time in the desert. His career ebbed and flowed too.

I look a lot at the price-to-earnings multiples because that’s a value of confidence. That’s a value of how much the market is assuming that everything will go right into the future for this company or that there’s a ton of risk. Look at Nvidia. For the last few quarters, they have blown away and destroyed the numbers the street had for them, and the stock is down. Ten years of confidence was already priced in.

PE multiples are a great barometer of confidence. They expand when our mood is high, and they contract when our mood is low. Moods and markets, in the first book I wrote, I include a chart that shows a wonderful relationship between those two over time.

Another thing you talk about in the book is five ways that people respond to extreme vulnerability. My guess is we’re seeing a lot of those. Could you go through those and then also talk about the implication in decision-making? A lot of leaders are probably sitting with those at the end of the year as they’re deciding, “What do I do for next year? Do I go for it? Do I play it safe?”

I call these the five Fs. I’ve mentioned them before. They’re Fight, Flight, Freeze, Follow, and Fuck it. Leaders pay too much attention to Fight and Flight. Those are the ones that always get our focus the most visible. Freeze is one, particularly in the workplace, that leaders underestimate. Low confidence paralyzes a lot of folks. You need to make decisions for them and help them move along.

Follow is our easiest response. The problem is we don’t always follow the right people. If leaders want to be followed, their messages need to be relevant and resonant to the folks that work for them. There’s the sabotage, the fuck it response, which we’re seeing a lot of. This is where you as a leader need to excise those that are staying but are destroying your business from within.

These are the responses of employees to feeling vulnerable. They either feel like they want to Fight, Fly, Freeze, Follow, and Fuck it. This is there, and then you need to manage those reactions as the leader.

You need to manage all five.

Those aren’t fun things.

They aren’t fun things and they’re happening all the time. If you look at an organization that’s undergone a merger, you can see them all in beautiful 4D every day.

Managing Your Confidence Level

I’m a leader. I’m an individual. I listen to all of this. I understand the importance of confidence. I understand the importance of which bucket I want to be in. It’s an interesting thing because the upper right is a good place to be in some cases, but a dangerous place to be. It sounds like you almost want to be in the middle. What should I do if I want to improve my ability to manage my confidence level and assess and know where I’m in critical decision-making situations?

Appreciate that your location and the location of those around you is in constant flux. While the ideal may be in the upper right, once you’re there, you’re likely to not stay there.

You’re in danger once you’re there. If you identified that you were there, you should probably be careful, right?

Yeah. Part of this is realizing that everything is in motion every day. The good piece of that is to also then remember that when you’re in the lower left hand corner, it’s not for forever. It’s for now. We tend to lose sight of that. The most important as a leader is to know where those around you are. Where are your employees? Where’s your board? Where are your customers, your suppliers, and your lenders? Their position is going to have a major impact on your success and failure. There, your job is to identify what is creating their vulnerability.

Effective leadership is about illuminating the vulnerability others have in their interactions with you and the business you run. Organizations tend to talk about possibility and opportunities. You will have an extraordinarily successful career simply by eliminating the vulnerability that those around you feel every day because they’re going to tell you their own problems, the problems they have with you, and the problems they have with their competition. Framing things in vulnerability opens up rich conversation.


The Elevate Podcast with Robert Glazer | Peter Atwater | Confidence


It goes both ways. it occurs to me again that the center is the desired piece. It would seem like a good leader would want to pull people up who are feeling gloom, doom, and vulnerability, but they also want to encourage caution and being careful from those that are overconfident otherwise. It makes me think back to something I heard about Joe Torre when he was manager of the Yankees.


The Elevate Podcast with Robert Glazer | Peter Atwater | Confidence


When someone made a mistake in a big game or otherwise, they would come in and pat them on the back or probably the butt and get them next time. When they did something like that when they were up a ton, that’s when he would rip into them and make a lesson of it and an example because he didn’t want to beat people when they’re down. When things are up is a good time to beat people up a little bit about the little things.

Your job as a leader is to recognize that those in the lower left hand corner, you need to be a Tee-ball coach, and those in the upper right hand corner, you need to be the coach of the Yankee. You have to frame your leadership based on where other people are.

We touched on this earlier. Given that a lot of people’s feelings of confidence are probably impacted more by perception than reality, how bad is technology, social media, and instant news on our psychology and decision-making frameworks?

I will leave it to others in terms of their views on reinforcing that it creates this vicious or virtuous cycle. We get to choose the media that we follow.

Also, I’ll amend what you said because as we choose the media to follow, we also choose the quantity of whichever media we follow, right?

Yes. The thing we’re missing with social media’s impact is the speed and the breadth at which changes in mood flow through to a crowd. Something happens and everybody knows at once. If I’m a leader, that doesn’t give me time to be strategic or to be thoughtful. I have no choice but to be reactive. I don’t think leaders are fully prepared to be as reactive as social media demands them to be.

Leaders today are not fully prepared to be as reactive as social media demands them to be.

Isn’t that a public policy of some of the companies like, “We’re not going to be a barometer of social issues and public news. Don’t expect us to respond to things the next day in press releases.” You could change the expectations on that a little bit as a leader.

You can, but realize that in the process, you are going to alienate someone.

You’re always going to alienate someone. The bigger problem is like, “Let’s figure out who we want to alienate and who we don’t rather than pissing off everyone in our organization.”

It’s then being consistent. If you’re going to have a policy for how you respond, it better be a policy that you’re prepared to live with in all circumstances.

We’re seeing the downside of that where all in these universities, we’re not going to weigh in on stuff after they weighed in on everything. People are not taking that very well.

You have to be consistent in your beliefs and messages. The other thing you need to be really careful about, if I’m thinking about corporate behavior, is affiliations. Whether it’s individual or organizational affiliations, the behavior of others is reflecting on you. This is a perilous time as an organization to be affiliated publicly with others because people are being much more impulsive and much more emotional. You could find yourself easily tied to the tail of somebody else.

It increases the importance of doing things for the right reasons because they match your values, not for the moment, to be performative, or otherwise. This is where a lot of the companies have gotten themselves in trouble, doing things for the wrong reasons, trying to win the moment, and losing the battle.

Anytime you open your mouth, consider, “Where am I creating vulnerability in my statement or in my action?”

That’s a great point. You are creating vulnerability for your organization.

Particularly vulnerability to my employees. I may believe strongly in a cause, but if my belief creates risk to my employees, I need to think much harder about that. I don’t see organizations thinking about the vulnerability that they’re creating in our hypercharged environments.

We’ve alluded to this, but I know you talk in your book about differentiating between personal confidence and societal confidence. How do those interact with each other?

I think of societal confidence as a measure of how did America wake up this morning? We’re all part of that. There is the environment that I may go to work in, so I need to layer in that. How do I feel about my own job in terms of my relationship with my boss? How’d things go with my spouse at breakfast? Were we in a good mood or was there contention?

What you can think about is, “Are these amplifying my vulnerability or are they quieting it? Are they deadening it?” I could wake up in a bad mood, but on the job, my boss loves me and I’m doing well. There’s a countervailing weight. Where I start to see problems and where I see things explode is when they start to stack up in ways that amplify each other.

If I think about Black Lives Matter, where did that movement come from? You had a backdrop of a pandemic. People felt bad when they got out of bed. Those that were impacted were already feeling vulnerable economically, racially, and socially. All it took was a spark. It was an event that had happened so many times before, but it was a tipping point. Malcolm Gladwell makes a big point about the significance of tipping points, but they’re not significant. They tend to be very small.

It’s this proverbial pf, “Straw that broke the camel’s back.”

These are straws, like Tom Hanks getting COVID and suddenly, everybody’s worried. The tipping points themselves are not significant. It’s the backdrop in mood. That is where all of the energy is.

This is the last question. I usually ask people about a mistake they made. In your case, what’s a mistake you made and learned from where you had an incorrect degree of confidence about?

One of the reasons I started to study confidence was in 2009, everything was going to hell. I am incredibly bearish and positioned in a very bearish way. Lehman collapses and the markets start to take off. I’m losing a lot of money. It’s where I was so certain I was right and not appreciating that the collapse of the Lehman Brothers is what happens at low in confidence. It’s not what causes confidence to fall. It’s what marks bottoms. I’ve spent fifteen years trying to understand my own mistake. It’s why it’s like, “Peter, what you think doesn’t matter, focus on what other people think because that’s where money is to be made and lost.”

Thank you again for joining us. A lot has gone on in the world since we spoke last, but your work and your new book are more relevant than ever. I hope people pick up a copy and learn from it.

I really appreciate the chance to catch up with you. Thanks.

To our audience, thank you for turning into the show. If you enjoyed the episode, make sure to follow the show to be notified about new episodes and have them downloaded automatically for you in your player. If you’re tuning in in Apple Podcasts, you hit the little follow on the show overview page or the three little dots in the upper right if you’re on an individual episode page, and then you can hit follow. You can also follow on Castbox, Spotify, Pandora, or your favorite player. Thanks again for your support. Until next time, keep elevated.


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About Peter Atwater

The Elevate Podcast with Robert Glazer | Peter Atwater | ConfidencePeter Atwater is one of the world’s leading experts on confidence and its role in decision-making. He is a professor of behavioral economics at William and Mary and the author of a new book, The Confidence Map, which published this year.

Peter has a unique background, having transitioned from a successful career in financial services to focus on studying confidence. He is a sought-after speaker and has been featured in Bloomberg Television, The Financial Times, the Wall Street Journal, and Time Magazine. Peter joined host Robert Glazer on the Elevate Podcast to discuss The Confidence Map, and how confidence factors into leadership, economics, decision-making and more.

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