Young children often struggle to answer the question ‘what would have happened?’, particularly in cases where the adult-like ‘correct’ answer has the same outcome as the events that actually occurred. Previous work has assumed that children fail because they cannot engage in accurate counter- factual simulations. Children have trouble considering what to change and what to keep fixed when comparing counterfactual alternatives to reality. However, most studies of the development of counterfactual reasoning have relied on binary yes/no responses to counterfactual questions about complex narratives, and so have only been able to document when these failures occur but not why and how. Here, we investigate counterfactual reasoning in a domain where specific counterfactual possibilities are very concrete: Simple physical interactions. In Experiment 1, we show that 5-10-year-old children struggle to answer binary counterfactual questions in this domain, but succeed in making predictions. In Experiment 2, we use a multiple-choice method to allow children to select a specific counterfactual possibility. We find that 4-6-year-old children do conduct counterfactual simulations, but the counterfactual possibilities younger children consider differ from adult- like reasoning in systematic ways: Children allow one additional part of the scenario they watched to vary. Experiment 3 provides further evidence that young children engage in simulation rather than using a simpler visual matching strategy. Together, these experiments show that the developmental changes in counterfactual reasoning are not simply a matter of whether children can engage in counterfactual simulation, but also how they do so.
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