Forest's slump in the Championship continued on Saturday as they were comfortably beaten at the John Smith's Stadium.
With his side now down to 10th place in the table and without a win in their last eight games, Pearce admits that confidence is an issue.
"You can't concede goals like that so soon in the match. We created opportunities in the game - we could have been more clinical with our forward play - but I think defensively we shipped too many cheap goals," he is quoted as saying by BBC Sport.
"It's eroded the team's confidence a little bit and we have to solve that."
Forest have the chance to end their winless run on Wednesday when they welcome Brentford to the City Ground.