Ever, heard of that term before? If you have interest in mathematics and statistics or you are working in the analytics industry for quite some time then you may have come across this at some point in your life. But, for those who haven't (including me before today) lets get a sense of what it is and why should you be aware of it.
So, lets start with a simple problem statement - You and your best friend make a bet. There are 6 die and both of you get a chance to roll all of them simultaneously. Before rolling the die both of you have to make a call as to what will the total sum across all 6 rolls be. The one who is closest to the actual answer wins. Quite easy, huh?
To some, this problem might seem to be a complete guessing game. There will be some other more smart folks, who would argue it's not a wild guess, as the sum will always be a number between 6 and 36, which is obviously correct, but does not help you decide which number should you choose. Is there a statistical or mathematical way of getting to an answer that could potentially help you win the bet?
Yes, there are atleast two ways that I can think of right now. Number one -You could do this using some old fashioned mathematics that involves some probability concepts, which is fine but I don't find it that exciting. The other way is using the Monte Carlo Analysis. (Sounds interesting doesn't it?)
In Monte Carlo Analysis, we simulate multiple iterations of a given situation by varying some probabilistically determined factors. In our case, the outcome of each roll. After running it repeatedly for some time, we end up with the frequency count of each outcome which we can use as a proxy for how likely that outcome is. Choosing the outcome which occurs the most should ideally increase your chances of winning.
The natural question is how do you do this? You don't need to do it manually or write some code for it. There are tools out there which will help you perform this analysis very easily. There are excel add-ins available as well for those who are comfortable in excel.
The Monte Carlo Analysis is frequently used for risk estimation in medium to large scale firms. It is also used in stock market and trading applications. It is one of the most widely used analysis in the industry. I came across this today and thought of sharing it with you guys as well. If you want to learn more about it then, I would really encourage you to do some googling around this and try it out for yourself.
I just want to make it clear that this is probably not the best explanation for this analysis and also the problem in discussion is not the well suited for it. But, I just learnt about this today and since I've pledged to do daily blogs this year, I didn't get enough time to come up with something better. So, if you have any concerns/doubts regarding the information presented above, please let me know in the comment section down below. I'm open to feedback that can help improve my understanding and the content of this blog so that others are not misinformed! And thanks for visiting! I'll be back with another post tomorrow! PEACE!
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So, lets start with a simple problem statement - You and your best friend make a bet. There are 6 die and both of you get a chance to roll all of them simultaneously. Before rolling the die both of you have to make a call as to what will the total sum across all 6 rolls be. The one who is closest to the actual answer wins. Quite easy, huh?
To some, this problem might seem to be a complete guessing game. There will be some other more smart folks, who would argue it's not a wild guess, as the sum will always be a number between 6 and 36, which is obviously correct, but does not help you decide which number should you choose. Is there a statistical or mathematical way of getting to an answer that could potentially help you win the bet?
Yes, there are atleast two ways that I can think of right now. Number one -You could do this using some old fashioned mathematics that involves some probability concepts, which is fine but I don't find it that exciting. The other way is using the Monte Carlo Analysis. (Sounds interesting doesn't it?)
In Monte Carlo Analysis, we simulate multiple iterations of a given situation by varying some probabilistically determined factors. In our case, the outcome of each roll. After running it repeatedly for some time, we end up with the frequency count of each outcome which we can use as a proxy for how likely that outcome is. Choosing the outcome which occurs the most should ideally increase your chances of winning.
The natural question is how do you do this? You don't need to do it manually or write some code for it. There are tools out there which will help you perform this analysis very easily. There are excel add-ins available as well for those who are comfortable in excel.
The Monte Carlo Analysis is frequently used for risk estimation in medium to large scale firms. It is also used in stock market and trading applications. It is one of the most widely used analysis in the industry. I came across this today and thought of sharing it with you guys as well. If you want to learn more about it then, I would really encourage you to do some googling around this and try it out for yourself.
I just want to make it clear that this is probably not the best explanation for this analysis and also the problem in discussion is not the well suited for it. But, I just learnt about this today and since I've pledged to do daily blogs this year, I didn't get enough time to come up with something better. So, if you have any concerns/doubts regarding the information presented above, please let me know in the comment section down below. I'm open to feedback that can help improve my understanding and the content of this blog so that others are not misinformed! And thanks for visiting! I'll be back with another post tomorrow! PEACE!
Hello, my name is Shubham. I am a B.Tech Computer Science graduate. I hope you have a nice stay here!
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