Ever notice that when someone is doing something awesome- be it winning a game, acing a test, making great music, fulfilling a lifetime dream- they are aroused and full of energy? On the other hand, when something is not done to expectation- losing a game, failing a test, missing notes on playing music, not doing something you really want- people tend to have low energy and are not excited; they are pulseless and anemic. Well, there is a relationship between how aroused (stressed) you are, and how you perform. There is a reason why competitive athletes are successful- not only do they focus on their physical abilities, they also focus on their arousal and energy (stress) level to compete at a high level and perform optimally.
The link between stress and performance is described in the inverted U-shaped hypothesis. This is where moderate levels of stress lead to optimal performance. But when you go to the extremes, such as being comatose on one end to having a panic attack on the other, then performance drops off drastically. So there is this curvilinear relationship between stress and performance. Mapping out this relationship with stress levels on the x-axis and performance levels on the y-axis, the curve that appears looks like an inverted-U.
A recent study showed this relationship between stress and performance, where subjects with anxiety were more likely to make bad decisions in unpredictable environments (Browning et al., 2015). Participants in the study had to pick one of two shapes- one of the shapes delivered frequent electric shocks, while the other shape delivered shocks less frequently. For a period of time, this would stay the same. But then the frequency of shocks was switched to the other shape. Eventually, the shock frequency was switched back and forth more frequently between the shapes. Subjects who had higher anxiety/stress levels picked the shape with more shocks more frequently. So the higher your stress level, the more shocks you received. Hence, if you have too much stress, it can have a detrimental effect on your performance and decision-making abilities.
In summary, you need moderate levels of stress to perform at your best. If you stress yourself too much, to the point of having panic attacks, then you don’t perform well. At the other extreme, if you don’t have any stress, to the point of being comatose, you also don’t perform well. So if you want to perform at your best, you need to find that sweet spot in the middle of that inverted-U curve with regards to stress level.