For two scholars representing opposing schools of thought, Daniel Kahneman and Gary Klein find a surprising amount of common ground. Kahneman, a psychologist, won the Nobel Prize in economics in 2002 for prospect theory, which helps explain the sometimes counterintuitive choices people make under uncertainty. Klein, a senior scientist at MacroCognition, has focused on the power of intuition to support good decision making in high-pressure environments, such as firefighting and intensive-care units.

In a September 2009 American Psychology article titled “Conditions for intuitive expertise: A failure to disagree,” Kahneman and Klein debated the circumstances in which intuition would yield good decision making. In this interview with Olivier Sibony, a director in McKinsey’s Brussels office, and Dan Lovallo, a professor at the University of Sydney and an adviser to McKinsey, Kahneman and Klein explore the power and perils of intuition for senior executives.

The Quarterly: In your recent American Psychology article, you asked a question that should be interesting to just about all executives: “Under what conditions are the intuitions of professionals worthy of trust?” What’s your answer? When can executives trust their guts?

Gary Klein: It depends on what you mean by “trust.” If you mean, “My gut feeling is telling me this; therefore I can act on it and I don’t have to worry,” we say you should never trust your gut. You need to take your gut feeling as an important data point, but then you have to consciously and deliberately evaluate it, to see if it makes sense in this context. You need strategies that help rule things out. That’s the opposite of saying, “This is what my gut is telling me; let me gather information to confirm it.”

Daniel Kahneman: There are some conditions where you have to trust your intuition. When you are under time pressure for a decision, you need to follow intuition. My general view, though, would be that you should not take your intuitions at face value. Overconfidence is a powerful source of illusions, primarily determined by the quality and coherence of the story that you can construct, not by its validity. If people can construct a simple and coherent story, they will feel confident regardless of how well grounded it is in reality.

Read the entire article at: McKinsey Quarterly

But Ivan Mladenovic is not scared by the economy. He started up his small business in the past year, during one of the most tumultuous economic times to do it. Mladenovic said Obama's plans could encourage him to hire more and spend.

"Actually the first place that I would spend money on is human capital, and that's something that's been the biggest asset of my business today, said Mladenovic. "So I certainly I think I would spend most of my money in hiring more people, because that's what's given back the most for me."

However the young entrepreneur has had his challenges. He's had difficulty getting small business loans through the banks. That is one of the areas Obama is looking to loosen for companies.

"Having governmental support for that is critical in its success," said Mladenovic. "I think that a lot of businesses will be looking for a loan to expand as well. Not only just to start up, but because a lot of business have been kind of latent for the last couple of years. So they've been anxious to get their hands on additional financing so they can expand."