I'm not sure how this would be failing, except in the sense that we knew from the beginning that it would fail.
Any mathematical formalization is an imperfect expression of real life. And any formalization of anything, mathematical or not, is imperfect, since all words (including mathematical terms) are vague words without a precise meaning. (Either you define a word by other words, which are themselves imprecise; or you define a word by pointing at stuff or by giving examples, which is not a precise way to define things.)
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Yeah, I also have nontrivial odds on "something UDTish is more fundamental than Bayesian inference" / "there are no probabilities only values" these days :-)
Sorry, I meant to imply that my faith in UDT has been dropping a bit too, due to lack of progress on the question of whether the UDT-equivalent of the Bayesian prior just represents subjective values or should be based on something objective like whether some universes has more existence than others (i.e., the "reality fluid" view), and also lack of progress on creating a normative ideal for such a "prior". (There seems to have been essentially no progress on these questions since "What Are Probabilities, Anyway?" was written about six years ago.)