Abstract
It seems that in interpreting others we sometimes simulate, sometimes apply theory. Josef Perner has suggested that a fruitful line of inquiry in folk psychology would seek "criteria for problems where we have to use simulation from those where we do without or where it is even impossible to use." In this paper I follow Perner with a suggestion that our understanding of our interpretive processes may benefit from considering their physiological bases. In particular, I claim that it may be useful to consider the role emotion plays in the respective interpretive processes. I give reasons for believing that affective processes are more heavily involved in simulation (especially in situations of practical judgment and practical reasoning) than in theory-application. But affective processes have distinctive neurological and metabolic properties. These distinctive features of emotion may not only enrich our understanding of the simulation process, but also afford us a step towards responding to Perner's challenge