I distracted my proto-AGI for a moment and asked it to take a minute to explain this to me.

The reason for collapse, apparently, is quite simple: while most of the fundamental laws of physics are all nice, linear and elegant, keeping track of all these wave forms quickly becomes computationally intractable, even on the machine that's simulating our universe (PhD candidate Zirro's request to uses the department's new infinitely powerful super computer for his project was apparently turned down as they are still trying to simulate AIXI). Anyway, once the wave form starts to interact with too many things a subroutine kicks in and simply collapses the matrix representing the wave. Yeah, it's an ugly hack, but Zirro's A+ in epistemology means getting a B in universe simulation isn't too much of a problem for him.