Generating random numbers with Monte Carlo method using


Generating random numbers with Monte Carlo method using


1.     Exponential distribution
2.     Uniform distribution
3.     Binomial distribution

Concept:

Monte Carlo methods (or Monte Carlo experiments) are a broad class of computational algorithms that rely on repeated random sampling to obtain numerical results; i.e., by running simulations many times over in order to calculate those same probabilities heuristically just like actually playing and recording your results in a real casino situation: hence the name. They are often used in physical and mathematical problems and are most suited to be applied when it is impossible to obtain a closed-form expression or infeasible to apply a deterministic algorithm. Monte Carlo methods are mainly used in three distinct problems: optimization, numerical integration and generation of samples from a probability distribution.

Monte Carlo simulation methods do not always require truly random numbers to be useful — while for some applications, such as primality testing, unpredictability is vital.[10] Many of the most useful techniques use deterministic,pseudorandom sequences, making it easy to test and re-run simulations. The only quality usually necessary to make good simulations is for the pseudo-random sequence to appear "random enough" in a certain sense.
What this means depends on the application, but typically they should pass a series of statistical tests. Testing that the numbers are uniformly distributed or follow another desired distribution when a large enough number of elements of the sequence are considered is one of the simplest, and most common ones. Weak correlations between successive samples is also often desirable/necessary.
Sawilowsky lists the characteristics of a high quality Monte Carlo simulation:
·        the (pseudo-random) number generator has certain characteristics (e.g., a long “period” before the sequence repeats)
·        the (pseudo-random) number generator produces values that pass tests for randomness
·        there are enough samples to ensure accurate results
·        the proper sampling technique is used
·        the algorithm used is valid for what is being modeled
·        it simulates the phenomenon in question.



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