Previous research illustrates that people can be influenced by the emotional displays of computer-generated agents. What is less clear is if these influences arise from cognitive or affective process (i.e., do people use agent displays as information or do they provoke user emotions). To unpack these processes, we examine the decisions and physiological reactions of participants (heart rate and electrodermal activity) when engaged in a decision task (prisoner's dilemma game) with emotionally expressive agents. Our results replicate findings that people's decisions are influenced by such emotional displays, but these influences differ depending on the extent to which these displays provoke an affective response. Specifically, we show that an individual difference known as electrodermal lability predicts the extent to whether people will engage affectively or strategically with such agents, thereby better predicting their decisions. We discuss implications for designing agent facial expressions to enhance social interaction between humans and agents. Copyright (C) 2012 John Wiley & Sons, Ltd.