As social creatures, we spend a lot of time thinking about the mental lives of those around us. Does mental state representation differ across social contexts? We will explore this broad question using approaches from social neuroscience and developmental psychology. In the first part of the talk, we will look at how people deploy theory of mind for cooperation vs competition. In the second part of the talk, we will look at how people update their moral judgments of familiar vs unfamiliar others, in response to prediction error. We will end with some discussion of how neural signatures can inform the question of whether “biased” updating (e.g., of familiar others) reflects motivated cognition or rational decision-making.