Monte Carlo Simulation

Monte Carlo Simulation

A problem solving technique used to approximate the probability of certain outcomes by running multiple trial runs, called simulations, using random variables.

Notes:

Monte Carlo simulation is named after the city in Monaco, where the primary attractions are casinos that have games of chance. Gambling games, like roulette, dice, and slot machines, exhibit random behavior.

See also: Black Box Model, Risk

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Monte Carlo simulation

An analytical technique for solving a problem by performing a large number of trail runs, called simulations, and inferring a solution from the collective results of the trial runs. Method for calculating the probability distribution of possible outcomes.