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Chapter 14. Monte Carlo Simulation

In a static model, time plays no essential role. The needle-dropping simulation
used to estimate in this chapter is an example of a static simulation. In a
dynamic model, time, or some analog, plays an essential role. In the series of
random walks simulated in Chapter 13, the number of steps taken was used as
a surrogate for time.
In a discrete model, the values of pertinent variables are enumerable, e.g., they
are integers. In a continuous model, the values of pertinent variables range
over non-enumerable sets, e.g., the real numbers. Imagine analyzing the flow of
traffic along a highway. We might choose to model each individual car, in which
case we have a discrete model. Alternatively, we might choose to treat traffic as a
flow, where changes in the flow can be described by differential equations. This
leads to a continuous model. In this example, the discrete model more closely
resembles the physical situation (nobody drives half a car, though some cars are
half the size of others), but is more computationally complex than a continuous
one. In practice, models often have both discrete and continuous components.
For example, one might choose to model the flow of blood through the human
body using a discrete model for blood (i.e., modeling individual corpuscles) and a
continuous model for blood pressure.