The theory that emotions are interpreted based on physiological reactions to events (later replaced by Cannon-Bard theory, which states the opposite).

I think this little example from helps immensely: Event ==> arousal ==> interpretation ==> emotionThat link can also provide you with several other examples and more information on this theory.

Example: While walking in the woods, you stumble upon a bear. Your heart begins to race and you notice that you are trembling. Thus, you conclude, you must be frightened.