Circular Instance Declarations

[Ashley Yakeley]

When -fallow-undecidable-instances is switched on, is there any reason 
why circular instances are forbidden? For instance:

 module CircularInsts where
    {
    data D r = ZeroD | SuccD (r (D r));
    
    instance (Eq (r (D r))) => Eq (D r) where
        {
        ZeroD == ZeroD = True;
        (SuccD a) == (SuccD b) = a == b; 
        _ == _ = False;
        };
    
    newtype C a = MkC a deriving Eq;
    
    equalDC :: D C -> D C -> Bool;
    equalDC = (==);
    }

When I compile this, I get this:

 $ ghc -fglasgow-exts -fallow-undecidable-instances -c CircularInsts.hs
 CircularInsts.hs:2:
    Context reduction stack overflow; size = 21
    Use -fcontext-stack20 to increase stack size to (e.g.) 20
        `Eq (C (D C))' arising from use of `==' at CircularInsts.hs:16
        `Eq (D C)' arising from use of `==' at CircularInsts.hs:16
        `Eq (C (D C))' arising from use of `==' at CircularInsts.hs:16
        `Eq (D C)' arising from use of `==' at CircularInsts.hs:16

Would it be reasonable for the compiler to check back through the stack 
and allow the circularity? It will just create an ordinary recursive 
function.

-- 
Ashley Yakeley, Seattle WA