Today I had an overview of the Monte Carlo simulation which is a method used to estimate probabilities for complex problems. This is how you go about it:
- Define the problem: Figure out what you want to understand or predict.
- Create a model: Make a simplified math model of the situation with key variables.
- Use randomness: Randomly guess values for these variables based on their possible outcomes.
- Repeat simulations: Run the model with these random values many times.
- Analyze results: Look at the outcomes to understand the likelihood of different results and make informed decisions.
It’s like playing out a situation many times with random inputs to see what’s likely to happen