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We provide a cognitive analysis of how children represent belief using mental files. We explain why children who pass the false belief test are not aware of the intensionality of belief. Fifty-one 3½- to 7-year old children were familiarized with a dual object, e.g., a ball that rattles and is described as a rattle. They observed how a puppet agent witnessed the ball being put into box 1. In the agent's absence the ball was taken from box 1, the child was reminded of it being a rattle, and emphasising its being a rattle it was put back into box 1. Then the agent returned, the object was hidden in the experimenter's hands and removed from box 1, described as a "rattle," and transferred to box 2. Children who passed false belief had no problem saying where the puppet would look for the ball. However, in a different condition in which the agent was also shown that the ball was a rattle they erroneously said that the agent would look for the ball in box 1, ignoring the agent's knowledge of the identity of rattle and ball. Their problems cease with their mastery of second-order beliefs (she thinks she knows). Problems also vanish when the ball is described not as a rattle but as a thing that rattles. We describe how our theory can account for these data as well as all other relevant data in the literature.

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Children approach counterfactual questions about stories with a reasoning strategy that falls short of adults’ Counterfactual Reasoning (CFR). It was dubbed “Basic Conditional Reasoning” (BCR) in Rafetseder et al. (Child Dev 81(1):376-389, 2010). In this paper we provide a characterisation of the differences between BCR and CFR using a distinction between permanent and nonpermanent features of stories and Lewis/Stalnaker counterfactual logic. The critical difference pertains to how consistency between a story and a conditional antecedent incompatible with a nonpermanent feature of the story is achieved. Basic conditional reasoners simply drop all nonpermanent features of the story. Counterfactual reasoners preserve as much of the story as possible while accommodating the antecedent.

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