The Simulate
worksheet performs a discrete event simulation of the Markov
Chain. Starting from a specified state, the stochastic process
is simulated for 20 or more steps using a Monte Carlo simulation.
The number of steps in the display is set when the worksheet
is created. Additional steps can be simulated by clicking on
the More button. Charts can be made of the state, state value,
cumulative value or discounted value. While all the other worksheets
show probability distributions or expected values over collections
of realizations, the simulation shows a single realization of
the process. The presentation helps illustrate the dynamic nature
of a stochastic process and the statistical affects of observing
the process for a finite number of steps.
This worksheet computes statistics based on the
simulation. The count rows accumulate the numbers of observations
in the several states, while the frequency row shows the proportions
of time that the system was observed in the states.
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