Argument A is presented by - well, let's call these people "Team Jennifer", just for fun.
So Team Jennifer believes vehemently that thought processes belong encased in quotes.
"She’s playing with you", I thought. "The loopy bitch is trying to get a rise out of you … of one kind or another."
Not a bad line if I do say so myself (and yes, it's one of my own). The quotes capture the thought nicely and neatly, and that clarifying "I thought" provides a comfortable breath-space mid-line, telling the reader that what they are reading comes from the character's mind and not from their mouth.
Let's move on to Team B - or Team Brad, as I like to think of them. These guys (or gals) believe that italics are the best way to present thoughts.
Gary had never been a people-person, but his recent sense of isolation was somehow worse. He knew there were other residents. Some of them made the strangest noises in the night.
But then, the nights are always full of strange noises, aren’t they, Gary?
Gary nodded. He looked down at the carpet.
Did you spot it? The character's thought? It's subtle, sure, but at the same time it’s immediately clear that what you are reading is neither narrative nor dialogue. There has been a temporal shift - you are no longer outside of the character looking in, but inside looking out - and you can clearly hear his thoughts.
OK, let’s move on to Team Angelina.
Skinny old Angelina prefers a bare bones approach, wouldn't you know? She doesn't believe in imprisoning thoughts in quotes, or bending them into nasty sharp italics. No, she likes them to stand proud and let them speak for themselves.
He considered tossing the carving into the bushes, and then after a moment’s hesitation he closed his fingers over it.
A keepsake, he thought. For luck.
Nice and clear, especially with that cheeky clarification jammed between them. But would it work without that? Possibly.
Of course, there are downsides to all three styles of presentation. Quoted thoughts can easily be misidentified as dialogue, especially if the thought preceding the attributing statement "he thought" is overly long or even if there is no attributing statement at all.
Italics fair no better or worse. It can be argued that the italic style is reserved for another primary use (to accentuate or lift a statement, as in the knew in the second example.) and to use it for another function has the effect of nulling its effectiveness in much the same way an exclamation mark loses its impact when over-used.
To use neither quotes nor italics might give a clean, unfussy look, but its effectiveness relies heavily on the skill of the writer to carry it off. If done well, the reader is left without a doubt that they are in fact reading the mind of a character in a book, in spite of there being no visible marks (besides any attribution) to distinguish it from the surrounding narrative. If done poorly, the reader will become confused, lost, directionless and may well wander off into fast-flowing traffic.
Arguably, there are additional modifiers to these three camps of thought. The addition of parentheses (brackets), for example, instead of quotes. Or italics within brackets. The use versus non-use of attributing statements. In conclusion though, all three arguments have their merits - and my research points consistently to this: not one of them is entirely correct or incorrect. It is - as with many arguments associated with writing - a stylistic thing. The most important thing, in my opinion, is that whichever way you choose - whichever team you support - you must be consistent.
Me? I'm a Brad man. Sometimes, when the mood takes me, I can be tempted to swing to Angelina. Never Jennifer though. That's not my style. And that's what it's really all about - style and consistency. Pick a style and stick with it, at least for the duration of the piece you are writing at the time.
Meanwhile, in the wonderful free-speech world of the internet, the debate on what is ultimately correct rages on...