The early 1980s was a creepy time for playing pool. Many players were being watched and didn’t know it.
Silent stalkers sat in the shadows making careful observations, lumping players into two groups: skilled and unskilled. One of those two groups would be spared from harm. The other would not.
Playing pool is a different thing for beginner and expert. Beginners must calculate the angles they can, and eyeball the ones they can’t, never feeling truly confident they’re lined up correctly. Their stroke is erratic and jabby. They often choose the wrong shot. And far too often the balls don’t do what they are supposed to.
Experts, on the other hand, can almost do this in their sleep. After thousands of hours at the table, they don’t need to calculate, they just feel the angles. They control more variables with less effort. They choose better shots. And they’re used to having things go their way.
Once the hidden voyeurs finished their initial reconnaissance, they made their move, approaching tables in full view, making their presence known, and making some players very nervous.
As play continued, the presence of the new observers took its toll on some of the players. We know this, because, even as some observers took their position in broad daylight, others remained in the shadows recording the outcomes of the shots being taken. And the results were published in 1982.
And the results were these: Without an audience, the beginners made 33% of their shots. With an audience, they made just 25% of their shots. Without an audience, the skilled players made 70% of their shots. And with an audience, they made 80% of their shots. 
The skilled players played better when an audience appeared, and the beginners played worse.
Psychologists would say that these pool players experienced something called the audience effect.
The Audience Effect: People tend to perform differently in front of an audience than when alone. Specifically, they tend to perform better in front of an audience when the task is simple or has been mastered, and worse when the task is complex or new.
OK, so why does this happen? What is it about an audience that affects people’s performance in this way? Here are three suggestions psychologists have made over the years:
Audience as Distraction: One suggestion is that an audience can be a distraction. And when we need to focus on the details of the task at hand, distractions will harm our performance. But when we’re already quite good at what we’re doing, and have achieved unconscious competenece, paying too close attention to the details of what we’re doing is what can bad. And an audience might help prevent conscious meddling from ruining our unconscious brilliance. 
Audience as Judge: Another suggestion is that what’s really unnerving or invigorating about an audience is the possibility that its members might be evaluating our performance. The threat of evaluation causes arousal. But the arousal is different for skilled and unskilled performers. For the unskilled performer it generates a fear of being judged negatively, which hurts performance. And for the skilled perfomer, it causes excitement at the prospect of being judged favorably. And that helps performance. 
Audience as Bequeather of Social Standing: An additional suggestion is that the effect might be greater when we are worried about our social standing. If the audience is not only evaluating us, but their evaluation might affect which social roles we are allowed to inhabit, the fear or excitement is amplified.
There is a large literature on the Audience Effect (which has more or less re-organized itself into two sub-literatures: “social facilitation” and “social inhibition”), and researchers have presented evidence to support all three of the above suggested roles for the audience.
So what can we do to take advantage of the psychology behind the audience effect? Here are four suggestions:
Both managers and those being managed should take note of the first two suggestions. It can inform both the way we design our offices, and the way we conduct performance evaluations.
Those being recruited into public speaking “opportunities” or podcast interviews should take note of the third point. If we get nervous speaking in public, it might be best to write out what we want to say word for word and just work straight from the page. That simplifies the speaking task considerably. If we’ve got no delusions of coming off as brilliant, but merely want to make sure we don’t embarrass ourselves, it’s much better to half-read, half speak our speech than to freeze up completely while trying to ad lib our way through it.
We might even consider simplifying the content of our presentation, sticking to the things we know for sure and have worked out well. That way our minds won’t be second-guessing themselves as we’re performing.
If we happen to be the top expert in our field, we’ve got social standing to spare, and we’re experienced with public speaking, then we might do well to toss our notes and dazzle the audience with our extemporaneous brilliance.
 Michaels, J.W.; Blommel, J.M.; Brocato, R.M.; Linkous, R.A. & Rowe, J.S. (1982). "Social facilitation and inhibition in a natural setting". Replications in social psychology. 2: 21–24.
 Baron, R. S. (1986). Distraction-conflict theory: Progress and problems. Advances in experimental social psychology, 19(1986), 1-39.
 Strauss, Bernd (July 2002). "Social facilitation in motor tasks: a review of research and theory". Psychology of Sport and Exercise. 3 (3): 237–256.