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buybuydandavis comments on Versions of AIXI can be arbitrarily stupid - Less Wrong Discussion
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There's another real point - focusing on your prior as "fit" to the problem/universe.
The space of possible priors Wolpert considered were very unlike our experience - basically imposing no topological smoothness on points - every point is a ball from the urn of possible balls. That's just not the way it is. Choosing your prior, and exploiting the properties of your prior then becomes the way to advance.