A number of researchers have focused on the distinction between upward counterfactuals that simulate a better reality and downward counterfactuals that simulate a worse reality. In this chapter the authors will discuss the important aspects of a model (Markman and McMullen 2003) that attempts to explain how the very same counterfactual can engender dramatically different affective reactions. According to the model, the consequences of simulation direction are moderated by what we have termed simulation mode--relatively stronger tendencies to engage in reflective (...) versus evaluative processing. In turn, the authors will describe how the interaction between simulation direction and mode produces important consequences for affect, motivation, and behavior. (shrink)