APMason comments on Value is Fragile - Less Wrong
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I'll only speak for myself, but 'everybody dead' gives an output nowhere near zero on my utility function. Everybody dead is awful. It's not the worst imaginable outcome, but it is really really really low in my preference ordering. I can see why you would think it's neutral - there's nobody to be happy but there's nobody to suffer either. However, if you think that people dying is a bad thing in itself, this outcome really is horrifying.