What is the Schachter-Singer two-factor theory of emotion?

The Schachter-Singer two-factor theory proposes that emotion requires both physiological arousal and a cognitive label for that arousal. You first experience arousal, then look to the environment for cues to explain it and label it as a specific emotion. The same arousal could be labeled as excitement or anger depending on context. In their 1962 experiment, uninformed participants injected with epinephrine adopted the emotion of a nearby confederate, showing that cognition determines which emotion we experience.