Option 3: What I and others advocate, talk to both kids to figure out what they *really* want. Kid B probably only wants the toy because Kid A has it, maybe there is a game they can both play together, or an alternate toy that would satisfy one of them, etc.
Seriously, try engaging a 7 year old in intellectual discourse about a course of action the 7 year old wants to pursue, but you don't think is a good idea. You won't win using logic - children don't generally have any. If your 7 year old wants to play in the street, you say "No!", and if they do anyway, you spank them. It's simple. You provide consequences to disobedience. I'm all for explaining WHY something is wrong, and I'm also all for listening to your children if they have a counterargument. But at the end of the day, it's just too dangerous to let a 7 year old play in the street. If they don't agree, I'm sorry, but their opinion doesn't count. They don't have the necessary experience to understand. That's what you, as a parent, are there for.
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