jacob_cannell comments on AIXI and Existential Despair - Less Wrong
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AIXI-like algorithms don't need to explicitly model any particular features of the world. It doesn't matter if the wire uses a google-plex of bits, it's completely unrelated to the bit-complexity cost of AIXI's estimator programs.
Both cannot simultaneously be perfect predictors as they completely disagree. Model 1 is correct when the output wire W2 is intact, Model 2 is correct only when the output wire W2 is cut or removed.
AIXI will always be trying to send actions down the W2 wire and it will quickly realize whether the wire is intact or not, converging on 1-type models or 2-type models, not both. And it will converge on the correct model type.