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 to begin with, what on earth is a model? Models are proxies that help understand the behaviour of physical and social systems. A toy car helps us somewhat understand how real cars move, 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 probabilistic or chance events are often described by simulation models based on the Monte Carlo method. In these simulations, occ...