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orthonormal comments on Harry Potter and the Methods of Rationality discussion thread, part 3 - Less Wrong
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That's because the passage isn't actually about TDT; Eliezer is trying to avoid throwing anachronisms into a story set in the 1990s. It's instead about the closest thing that existed at the time, Hofstadter's idea of superrationality, which does (IMO) suffer from the flaw you posit.