Imagine being faced with the decision to sacrifice or activate a creature simply because another player started their turn? By using a delayed triggered ability, the need to make that decision is delayed until after the cost is payed.
"When you do, ..." is triggered ability.
603.1. Triggered abilities have a trigger condition and an effect. They are written as “[When/Whenever/At] [trigger condition or event], [effect]. [Instructions (if any).]”
Specifically, it's a variation of delayed triggered ability called a reflexive triggered ability.
603.12. A resolving spell or ability may allow or instruct a player to take an action and create a triggered ability that triggers “when [a player] [does or doesn’t]” take that action or “when [something happens] this way.” These reflexive triggered abilities follow the rules for delayed triggered abilities (see rule 603.7), except that they’re checked immediately after being created and trigger based on whether the trigger event or events occurred earlier during the resolution of the spell or ability that created them.
The ability is only created on resolution.
603.7a Delayed triggered abilities are created during the resolution of spells or abilities, as the result of a replacement effect being applied, or as a result of a static ability that allows a player to take an action. A delayed triggered ability won’t trigger until it has actually been created, even if its trigger event occurred just beforehand. Other events that happen earlier may make the trigger event impossible.
This has two implications.
First, the target is chosen when the delayed triggered ability is placed on the stack, not when Tolarian Kraken's ability is placed on the stack. This is inconsequential.
The other, relevant implication is that this gives a chance to the players to react to the delayed triggered ability. This is beneficial to the opponents of Kraken's controller since they know the cost has been paid before having to react.
Doing otherwise would make Tolarian Kraken an overly powerful card. Imagine being faced with the decision to sacrifice or activate a creature simply because another player started their turn? With the current wording, Tolarian Kraken's controller must commit to paying for the ability before forcing a response.
[This is effectively the same answer as murgatroid99's, but it explains why the targets are chosen later than they would be with