The happy victimizer demarks a phenomenon in which there is a discrepancy between young children's understanding of moral rules and their attribution of positive emotions to wrong-doers. In this paper, we argue why developmental transitions in this aspect of emotion understanding have both theoretical and applied value. First, the research literature on moral emotion expectancies is critically reviewed and methodological constraints of the happy victimizer experimental paradigm are discussed. Second, we elaborate on the connections between moral emotion expectancies and children's understanding of human agency. It is argued that the coordination process involved in making moral emotion attributions and moral judgments is a key element in the evolving moral self. Third, the developmental significance of moral emotion expectancies for children's and adolescent's externalizing symptoms and adaptive behavior is discussed.