Monte Carlo Analysis

Monte Carlo analysis is term used to describe the statistical modeling of a complex problem. A quick example of how this works is looking at the odds of getting five a kind in yahtzee. It is obvious to some how to calculate this, but here’s how: roll one die, let’s say it’s a 2, now roll another one, what are the odds it is 2, 1:6, repeat this for the remaining three dice and you’ll see the odds are one in 6*6*6*6=1296. Another way to determine these odds are using a Monte Carlo analysis by running a simple computer program that rolls 5 dice a million times and see how many times you get one. Ideally you would get 5 of a kind 771.6 times, but in reality, due to randomness, some times you may get 768, or 780, or 778, which is still a good estimate of what the odds are. If you want better accuracy, you run more trials, say 10 million times in this example. To how useful this is, see Are scratch tickets really random.