Two studies are presented that explore the interpersonal effect of emotion displays in decision making in a social dilemma. Experiment 1 (N=405) showed that facial displays of emotion (joy, sadness, anger and guilt) had an effect on perception of how the person was appraising the social dilemma outcomes (perception of appraisals) and on perception of how likely the person was to cooperate in the future (perception of cooperation). Experiment 1 also showed that perception of appraisals (partially and, in some cases, fully) mediated the effect of emotion displays on perception of cooperation. Experiment 2 (N=202) showed that manipulating perception of appraisals, by expressing them textually, produced an effect on perception of cooperation thus, providing evidence for a causal model where emotion displays cause perception of appraisals which, in turn, cause perception of cooperation. In line with Hareli and Hess’ (2010) findings and a social-functions view of emotion, we advance the reverse appraisal proposal that argues people can infer, from emotion displays, how others are appraising a situation which, in turn, support inferences that are relevant for decision making. We discuss implications of these results and proposal to decision and emotion theory.