Social theories-beliefs about relations between variables in the social environment-are often used in making judgments, predictions, or decisions. Three experiments on the role of explanation in the development and use of social theories were presented. We found that explaining how or why two variables might be related leads to an increased belief in and use of the explained theory. A counterexplanation task was found to be effective in eliminating this initial explanation bias (Experiments 2 & 3). These explanation and counterexplanation effects occurred in a variety of theory domains (Experiment I), with simple belief measures (Experiments I & 3), and with complex social judgments involving multiple predictor variables (Experiment 2). Finally, we found that such new, explanationinduced beliefs did not lead to biased evaluation of new data. However, exposure to new data indicating a zero relation between the social variables in question only moderated the explanation-induced theories; it did not eliminate them (Experiment 3). Implications for decision making in real-world contexts and for understanding the cognitive processes underlying explanation effects in the present and in related judgment domains were also examined. Social judgments and decisions, ranging from the trivial to the absolutely crucial, frequently are made using social theories of dubious validity. By social theories we mean beliefs people hold about how and in what way variables in the social environment are related (cf. Anderson, Lepper, & Ross, 1980). Consider the decisions faced by emergency room doctors when presented with a 3-year-old child admitted for treatment of head injuries, bruises, and lacerations possibly due to parental child abuse. Should the attending physicians call the police, or try to get the parents to see the hospital counseling personnel, or simply ignore the evidence of child abuse? The decision will be based on the physicians' social theories about the effects of various interventions on the social, emotional, physical, and intellectual well-being of abused children. Some may believe that legal prosecution of the parents, perhaps resulting in the courts placing the child in a foster or adoptive home, produces the best outcomes for abused children. Others may believe that family counseling, without legal intervention, is best. Still others may feel that legal and psychological interventions are both worse than doing nothing-namely, that the parents will probably not engage in abusive behaviors again, and that they will provide the best environment for their own child. Or consider political decisions concerning national defense issues. Should the United States continue the present massive build-up of nuclear and nonnuclear forces? People's judgments will depend on their social theories relating these actions to the responses of the Soviets. Do threatening gestures promote peace