The hypothesis, that a conceptual limitation underlies 3-year-olds' difficulty with false-belief attribution (Wimmer & Perner, 1983), was tested against three competing hypotheses. These were: (1) failure to retain essential facts, (2) failure to understand the normal expectations which give rise to false belief and (3) pragmatic misinterpretation of the test question. Results showed that false-belief attribution remained difficult for younger 3-year-olds despite their retention of essential facts and despite attempts to make expectations more explicit and prevent pragmatic misinterpretation. These findings strengthen the original hypothesis, specified here as the inability to assign conflicting truth values to propositions. This hypothesis can explain why 3-year-olds find pretend play, the distinction between expected and achieved outcomes, the real-imaginary distinction and level 1 perspective taking easier to understand than false belief, the reality-appearance distinction and level 2 perspective taking.