Abstract
As the opening line of Dickens' classic novel suggests, it is very often the case that people can imagine both better and worse alternatives to their present reality. Although Dickens was writing about events that occurred over two centuries ago, it remains just as true today that we clearly live in neither the best nor the worst of possible worlds. For instance, we can wish for the amelioration of present difficulties in the Middle East yet still take comfort in the fact that the threat of nuclear war has been greatly reduced since the end of the Cold War. On a more mundane level, it is easy for us to imagine how various aspects of our lives, such as our jobs, marriages, or physical fitness, could be both better and worse. Undoubtedly due to the pervasiveness and intrinsically fascinating qualities of this phenomenon of imagining alternatives to reality, there has been a veritable explosion of research in recent years on what have been termed mental simulation and counterfactual thinking processes. This chapter speculates upon and provides evidence for the antecedents and consequences of two types of counterfactuals: upward (it could have been better) and downward (it could have been worse). The importance of studying the antecedents and consequences of counterfactual direction lie in the differential structures, emotions, intentions, inferences, and behavioral consequences of upward versus downward counterfactual thinking.