The example is a bit unfortunate - in this hypothetical world, smoking doesn't cause cancer at all (at least in the first example).
It refers back to the tobacco companies' lies that the correlation between smoking and cancer could be exaplained by a third factor (ie a gene).
I meant in the second example. I agree that in the first one if she doesn't use the desire as evidence of the gene she'll get a result saying she should smoke. But in the second one even if she does ignore that then the probability of cancer given that she smokes is higher than the probability of cancer given that she doesn't.
If she doesn't have the gene, then she can smoke or not without any change in risk. She doesn't know if she has the gene or not, but if she then smoking makes her more likely to get cancer. So, if she sums across both possibilities, she's more likely to get cancer if she smokes. Not by as large a margin as if she knew she had the gene, or even by as large a margin as she would estimate if she included the urge to smoke as evidence that she does, but it's still more likely.
P(C|S&~G) = P(C|~S&~G) = P(C|~S&G) < P(C|S&G). So P(C|S) > P(C|~S), even without looking at the probability of the gene given that she prefers to smoke.
It seems to me that even under CDT, Susan smoking would make her more likely to get cancer. She gets some enjoyment out of smoking, but there is also a probability P that she gets cancer from it. Even if she isn't allowed to use her preference as evidence that she has the gene, she still might have it. The dislike of cancer dominates the equation. I suppose you could fix that by adjusting the utilities she assigns to smoking and cancer, and the probability that she gets cancer given that she smokes, but I suspect that's not the point.
What'd I miss?
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I agree with both you and Kelly most of the time, you more than him. I did think this part required a nitpick:
If I became superintelligent tomorrow, I probably wouldn't significantly change the world. Not on a Singularity scale, not right away, and not just because I could. Would you? My point there is that you can't assume that because the first superintelligence can construct nanobots and take over the world, it therefore will.