Why do good project managers make bad decisions in worst situations?

We are humans and humans do mistakes. Stress and pressure could be one reason for that. Not enough skills to deal with bad situations could be another reason too :)

A good project manager might be good when things are going as planned.  He is capable of monitoring work, motivating the team, etc.  But when a tough situation arises he may not have the necessary experience to deal with the situation.  He might not have been placed in such a situation before, so he is likely to make the wrong decision.