so when circumstances are presented that induce fear, it's natural to make poor decisions.
Well... I think that the two are less related. "Fear" in and of itself can be a very useful tool in making a pilot pay attention to the situation. For me, when I begin to fear something while flying (or contemplating it) my first thought is what is my "plan B" should I need to do that. A sense of fear is also very useful in preventing doing needless nor stupid things in airplanes. Many times, while flying or flight testing my client's prized company test airplane, a product of thousands of hours of dedicated work and investment, I have a persistent fear of having to explain how it got bent while in my care. Yet my job is to fly it to limits to be sure it complies. So, in those cases, my "plan B" begins before the flight as excluding threats which have no benefit to the flying. In any case, I frequently allow the prospect of fear to affect my decision making.
As for the decision making itself, yeah, you have to have the background understanding of all of the risks to be able to anticipate what to be afraid of, and decide well! This is probably where the gap exists in the present flight training environment. Do the instructors have personal experiences with risky situations, to correctly understand risk, and promote appropriate fear? I opine not as much as the generations which went before. Reasonable regulatory and industry safety initiatives steer "normal" flying toward being more safe - excellent! The side effect of that is that normal operations tend away from more risk, so those pilots simply don't get that element of the experience, upon which to base decision making and useful fear. It seems that we have a generation of new pilots who are "afraid" of spinning. In decades past, we'd go spinning for fun - it was normal flying, when done within wise (published) limitations. The fear about spinning should come when doing it at questionably low altitudes, or unsuitable airplane condition/types.
Pilot training would benefit from new instructors embracing wisdom of those who have gone before; both "yes, this can be safely done within limitations", and "don't do that if you can avoid it". In a correctly loaded 172, and with suitable space under you, a spin is fine if well executed. But, in that same airplane, a pilot might think nothing of a climb away at Vx when there is no obstacle to clear, entirely unaware that fear right then would be very wise. A Vx climb may have you in a regime of flight from which an EFATO cannot be recovered to a safe landing.
Ironically, the one time I got it really wrong, and allowed my student to splash us, it was a zero fear situation, he had demonstrated excellent handling skills in the dozen or more hours we'd flown together those days, and conditions were perfect for a good landing in all regards. I was going to get out at the dock, and send him solo. I had zero fear about what was to become a near fatal event. My renewed fear based on that, has me avoiding doing training. The fellow who took over from me made the same mistake as I the following year (ironically at the same location), the only difference being that he had got out at the dock, so he watched a near fatal splash, other than being aboard for it. Not much less worrying though!
Take every opportunity to learn what to be afraid of, and what plan B should be. Have lots of plan B's and don't hesitate to switch to them. Just one advice about that, once you decide to switch to plan B, stick with that decision, unless the change in circumstance after your decision is profound. Do not waffle between plans A & B, that is no plan!