My choice is the third alternative.
Suppose you play a game with the rule that "forgotten privileges are lost", then that game might be less fun. So, in such games it would be good to make the previous(/next) players to remember their privileges.
If it will be a problem with the "forgotten privileges are lost" rule, then that game might probably be bad designed. Such a bad design can usually be easily fixed, using pen and paper.
On the other hand, any rule where "forgotten privileges are NOT lost", might still be worse than the lost rule, depending on the situation. So, there should be a third alternative:
- At least as long as no privilege is forgotten and no pen and paper are used, pay attention to the previous(/next) players and remind them of their privileges.
- First time any privilege is forgotten should go with the rule "forgotten privileges are NOT lost".
- Any time, a player forgets a privilege again, it should be lost. So, the general usage of pen and paper (for at least that player) should be established after the first time.
Dependent on the type of game, it is very irritating and therefore suboptimal to pay attention to the previous player: Oneself has to be reminded whenever it is the previous player's turn, and one cannot think about the own turn while paying attention to the previous player. So, at least in that case, it will be better to pay attention to the next player's turn instead. To do this is actually contra-intuitive, because one's stress is gone when the own turn ends; so, this has to be trained and secured by observing the observer: pay attention that the next player pays attention. If this is too bothersome, remember that pen and paper might be good alternatives to minimize the needed attention span.