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Nisan comments on Harry Potter and the Methods of Rationality discussion thread - Less Wrong
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The events in a story fit into a narrative. If I were in a story, I might be able to make especially accurate predictions by privileging hypotheses that make narrative sense. Dumbledore did this on an intuitive level, and it is the reason for his success.
This is basically an attempt to formalize genre savviness.
And of course, if you really were in a story and tried it, story logic dictates that you would almost certainly end up being wrong genre savvy