Simulating Geopolitical Scenarios | Monte Carlo ++
Consider a crisis in the Strait of Hormuz. Iran closes the waterway. The United States must decide whether to respond with military force, negotiate, or seek some less obvious accommodation. Each decision could trigger a different chain of reactions, leading to escalation, stalemate or de-escalation. Can we build a model that systematically explores these alternative futures without pretending to know which one will actually occur? But first, what is a model? Models are proxies for understanding physical and social systems. A toy car helps us understand real cars, while Newton's laws explain gravity. Models evolve: a radio-controlled car is more sophisticated than a wooden toy, just as Einstein's model of gravity improves upon Newton's. Complex situations that are dependent on the outcome of random variables are often described by simulation models based on the Monte Carlo method. In these simulations, random numbers are generated using well-understood probability distribut...