What Is the Monte Carlo Method?

There are many different ways to analyze information and use it to your advantage. One of these methods is the Monte Carlo Method. Understanding this method may help improve your skill at analyzing difficult information.

  1. Definition

    • Monte Carlo Methods analyzes a series of randomly generated numbers and observes the way these numbers interact. This method is used when the problem is too big to solve via careful analysis.

    History

    • The Monte Carlo Method, while in use before, was named by Stainslaw Ulam, a mathematician, in 1946. He named it after the town where his uncle gambled, reflecting the "guesswork" nature of the method.

    Method

    • There is no set "Monte Carlo Method." It simply refers to any kind of simulation that uses randomly generated numbers to estimate. Randomly samples are taken and weighed against existing knowledge of the problem. These are then examined and used to predict the rest of the problem.

    Example

    • There is a garden with 100 plants--20 are potatoes and the rest are weeds. They have the same plant stem. The potatoes were planted in straight lines of five. The farmer picks twenty random plants. He pulls three potatoes. Using this and his knowledge of their planting pattern, he can guess where others are more accurately.

    Uses

    • Monte Carlo Methods are used in sciences and mathematics. For example, astrologers use Monte Carlo Methods to estimate how many stars exist. Chemists use it to estimate the number of atoms in a substance.

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