We analyze the dynamics and observational predictions of supersymmetric
hybrid inflation in the warm regime, where dissipative effects are mediated by
the waterfall fields and their subsequent decay into light degrees of freedom.
This produces a quasi-thermal radiation bath with a slowly-varying temperature
during inflation and further damps the inflaton's motion, thus prolonging
inflation. As in the standard supercooled scenario, inflation ends when the
waterfall fields become tachyonic and can no longer sustain a nearly constant
vacuum energy, but the interaction with the radiation bath makes the waterfall
fields effectively heavier and delays the phase transition to the
supersymmetric minimum. In this work, we analyze for the first time the effects
of finite temperature corrections and SUSY mass splittings on the quantum
effective potential and the resulting dissipation coefficient. We show, in
particular, that dissipation can significantly delay the onset of the tachyonic
instability to yield 50-60 e-folds of inflation and an observationally
consistent primordial spectrum, which is not possible in the standard
supercooled regime when inflation is driven by radiative corrections.Comment: 28 pages, 5 figure