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3p1cd3m0n comments on Open Problems Related to Solomonoff Induction - Less Wrong
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It doesn't: for example, the set of strings 0, 10, 110, 1110, 11110, 111110, ... is infinite and prefix-free. So is the set of C-style (null-terminated) strings.
I see. Does the method of normalization you gave work even when there is an infinite number of hypotheses?
It does. The infinite sum will always converge, so by normalizing we can make it converge to 1.
Take gjm's approach to explaining the normalization, in which the initial weight of 2^-length assigned to a hypothesis is the probability that you obtain that hypothesis by choosing bits at random. Then the normalization is just a conditional probability: you divide by the probability that, when choosing bits at random, you do eventually end up hitting a hypothesis.