According to Nick Bostrom, given a set of plausible assumptions about the evolution of intelligence in the universe, it is far more likely that we live in a simulation. But Nick Bostrom only gives as motive for the creation of simulations the need of other civilizations to study their past. In fact, it is quite easy to imagine many more reasons to create a simulation, here are a few:
(as a side note: we also don't need to depend on the strong AI assumption that "a computer running a suitable program would be conscious" since even if we imagine that the real world does not allow for computers to be conscious, we can still conceive that the computer would provides the landscape on which consciousness or the soul would dwell. In both cases simulations would be possible.)
We must remember that we just discovered computer science. In the few decades that computer chips had the chance to evolve we have already managed to create quite interesting simulations in movies and games. From special effects in movies, animated stories and games with virtual realities. In just a couple of thousand years it is unlikely that we have failed to manage to simulate realities that are as good as the real thing. At least visually. Now, the distinction between movie and game will probably erode. Imagine for instance a movie like Toy Story. We have all these characters and familiar spaces going on. It would be relatively easy, with more developed hardware, to recreate at home a private adventure in that realm. Wouldn't it be nice to travel and have adventures and talk with these guys? The same would happen with Wall-E and so forth. Movies may become just the first part of an all-adventure that you bring home and recreate to yourself. The more interesting movies, or simulated realities, will bring many people towards them, and one of the hypothesis is that they will be interacting with each other, on line, through the virtual reality. So, for instance, we could all be inhabitants of the Far Way land, in Shrek, making our way in Chihiro's world (one of Miyazaki's wonderful movies), playing around in Robots' (2005 movie) land, rebulding Wall-E's world, and so on. The more interesting the world, the more we would be enticed to live in it.
Unfortunately, our present speculation creates the dreadful scenario that the "real" world, that harbors our present world, may in fact be much duller than the simulated world we live in. I mean, if we have left the "real" world of our own accord to live for so long in this reality, then there is a good chance that this world is more interesting to live than the one we just left. But another possibility is that these beings live for so long - millions and millions of years - that they need to be distracted, they need to feel mortal and in risk again. So, for such a being, almost immortal, with incredible knowledge and power, it may be "fun" to incarnate a character in a simulated world where he is fragile, poor, ignorant, and so on, and see what happens, how he sorts things out. In fact, it may be the only way for such a powerful being, to really experience what frailty "feels like".
This would also explain why our "simulation" runs for so long: for a million-year-old being a few decades is almost nothing. But we might also imagine that such a simulation would not take years and years, two things may happen instead: one is that we just have the illusion of having been here for years and years, while in fact most of our memories were imprinted. The other is that, perhaps we are near immortal in the "real" world, or perhaps one year here may be just a second or less there. So in fact it is not much time, and we are having adventures, both physically, emotionally and cognitively, that keep us well occupied.
It is also likely that, in this simulated reality, there would be a mixture of real people and simulated "bots", which would be hard or even impossible to distinguish from the simulation.
We can also imagine that leaving the simulation is only possible in death, in dreams, or all the time but we just don't remember it because, when reinserted into the simulation we forget all about the "real" world.
Well - there goes our first speculation, quite different from "Jesus died from you", or the invisible pink unicorn, but the interesting point is: there are millions of them, waiting to be described and explored.
So lets keep ourselves in the realm of simulations and lets go to another possible motive.
Now, when we imagine the future, many thousands or even millions of years from now, it is quite easy to imagine that humanity - or whatever its most intelligent heirs have transformed into - would have mastered immortality. Either enhancements to our biological bodies, either by migrating to bodies intelligently designed by us, we would have achieved such long time-spans that it would be difficult not to call it immortality (of course, the way we imagine God's immortality is quite different: God is not only immortal given the right conditions, He is immortal in any condition, which means, He cannot be destroyed: even the disappearance of the entire universe would not bring about the disappearance of the traditional Gods (christian, hindu, etc. the same, of course, does not happen to physical beings, because, however long their lifespan is, they are still dependent on what happens in the physical world. This may be tantalizing to one who already has a few million years, and counting!).
But, even if this is true, there might be a period of time when we can maintain the cognitive part of our body well functioning, but, for some reason, not the physical part. That means, we may be stuck in a wheel chair or something like that. It may be because of disease or pain, some fundamental characteristic of the body that demands death for consciousness, lack of resources (food, energy), a spiral in pollution or adverse environmental factors. We may even suppose that we are "really" the last inhabitants of a dying planet, trapped with no way out to escape. In the few centuries that we have left, before the planet is burned out by some cosmic, unavoidable disaster, we go deep inside a simulation.
Now a simulations may have two great features compared with such a dystopia: first it of course replaces the awful and unavoidable reality by some appealing alternative, secondly it may provide much more time to live. Suppose for instance that we are, in reality, part of an advanced civilization that has already replaced every body by an artificial, cybernetic, body. Our all planet is just an immense city, driven by electrical generators. In our search for power and immortality, we have destroyed all other life forms. We don't need oxygen, or any other interaction with biological creatures, and since they are a risk to our circuits we have, over the course of millions of years, destroyed them, bit by bit, under a series of pretexts. The problem is, many of us don't like to live in such a barren world, where all we see are machines everywhere. So we covered our eyes, went deep into a simulation where the world is still green, where we can still contemplate the society's decision to prefer biological or synthetic organisms. Nature or artificiality. Most importantly, we can see and interact with cats and dogs and all sorts of plants and animals, not being reminded that we are seeing just an image. That all that is history.
Or it might be that I am in fact very sick and alone in the real world. Perhaps I'm poor and have no family. And the state has a special offering for those dying. Instead of simply dying in pain and all alone, I may have a family in a simulated reality, do things, have a functioning body. More importantly, I would have the benefit of forgetting all the limits that I had before and all the tragedies of my past history. Instead I could be blissfully ignorant of my real condition and living an adventurous life. My death in this simulated world could be coincindental with my death in the real world, so that I would be spared the suffering of awakening to my true miserable condition.
There are many other such possibilities, all of them have in common the fact that we are trying to evade some hurtful (or even deadly) situation, and perhaps buying time.
Instead of being trying to evade some horrible but "real" context, we may be being forced into a simulation. For instance we may be war prisoners who are kept immobilized for enormous quantities of time, occupied by the copious distractions provided by the simulation which could, in this circumstance, made us die and relive an almost infinite quantity of times, just to keep us in a deep sleep, harmless and defenseless, in their spaceship prison. In this case, our only hope would be that our captors would be conquered by someone who would set us free. We would be incredibly amazed to recollect who we were and by the vast amount of time in which we were living in this simulated "planet".
One of the most appealing visions of the world is to see it as some kind of test ground where our morality is checked by some invisible beings who accompany not only our physical moves but also our invisible intentions. Now this can also easily be imagined as compatible with a simulation. Imagine that we committed some kind of crime. Now, in an advanced society, putting criminals together in a restricted space for long periods of time, is, with all likelihood, not considered as an intelligent response, specially because that will likely just produce more refined criminals. A much better response would be to put these dangerous individuals occupied in a place that could not hurt them - in a simulated reality - which would be open enough as to see which kind of choices they would made. It would for instance offer them the choice to steal, rape, cheat, betray, lie, etc. With more or less considerable personal gain. An automated program could easily adjust the available tests according to past responses and administering end results that would "teach" the subject in the simulated reality, the consequences of his choices.
So for instance a rapist could at first be put in a situation where he could beat and kill a person, then just rape her, than rape her without no one else knowing about it, than rape her without even her knowing about it (as a consequence of a drug for instance), then just watching someone rape someone else, just listening to reports of raping, just thinking about raping, etc. Of course the program could adjust the situation to more or less severe circumstances according to the response of the individual.
There are two basic possibilities to such simulated "correctional" worlds: one of them is one in which there is only in fact one conscious individual - the one being tested. Everything else are just bots. So when he rapes, cheats, beats, kills, etc, there is really no one there being raped, killed, etc. It's just him doing it, like in an extended version of his own imagination, but without perceiving it. He thinks he is really producing suffering, while in fact he is the only one there able to observe it.
The other possibility is to link the worlds together so that the abuser and abused are linked and have a taste of their own remedy as they fight with each other and occupy the several possible positions (hurting or being hurt)... I think it would take a rather sadistic society to build such kind of simulation, but we may also imagine that it is much more effective as a learning tool, since a computer could never feel as real as a real torturer. But this is less than clear.
In any case, it would be possible to see when the individual would be "cured" or corrected: when his will was so "good", then even in the presence of the highest gains and fewest penalties he restrained from the offending behavior. This offending behavior may be anything we may want to imagine, from breaking the "golden rule" (don't do to others what you do not wish others would do to you, or some similar version), not absence of love, to not criticizing the ruling party, not eating bananas, not eating anything, not polluting, fighting for euthanasia, whatever... There is an infinite world of possibilities there, including the ones from our traditional religions: obedience (judaism and muslims), love (christianism), detachment (buddhism).
A much more agreeable hypothesis is to imagine that, instead of having committed a crime in the real world (even if only in our mind!!), we simply were naïve, like a very small infant. And that the function of the simulation is similar to that of a school. We may imagine that we are (or I am) here to learn values, facts, attitudes, or anything else. Of course we may imagine that we are here to learn to love, or that we are here to learn how to overcome love and be logical, strong, ruthless, etc. A teaching world may be imagined with an infinite variety of purposes or conjugation of purposes. Since the people we know of have actually taken lots of different lessons from the lives they lived, at least that subset of goals must be possible since they were actually the reported end result for some of us (like Hitler, Madre Theresa of Calcuta, Jesus, Ghandi, the Wachowski brothers, Galileu, Torquemada, Tesla, Osho and so on).
Whatever the end result we may imagine the world to have, it must be comforting to imagine that this whole reality was created just to teach us something. This would also suggest something about the nature of knowledge as it would seem apparently simpler for an advanced civilization to just create us with the relevant principles, goals or abilities, or to teach us in some other less manipulative way (without an illusory world in between). One of the hypothesis to understand why such simulation might be needed is to imagine that only with free choices can some kinds of understanding be attained. That is one would have to desire to learn, for instance about the beauty of a music, in order to really understand it. If that is more than a simple physical process then perhaps even an advanced civilization could not really teach someone the beauty of Mozart's music. Someone would have to want to see that beauty, and that will to see the beauty, we may continue to imagine, could not be implanted or forced. And so one could have to wait millions of years or more for a particular person to finally want to see the beauty of Mozart's music, or of the flight of the nightingale or some other thing.
One particularly interesting vision of the world is that suggested by Carlos Castañeda and also present in the movie The Matrix. That we are in fact beeing eaten, that we are being used for food, just as chickens are maintained in a chicken house to be eaten. With the difference that we are beig eaten all the time. In this perspective we are put in a world that makes us feel all sorts of different emotions. These emotions are then used to feed those that live above our world, either in a real world, or in another simulated or dream world, but which has the aility of feeding from this one. It is, in this perspective, in the interest of that fed world to keep us in ignorance, thinking that we're doing all this important stuff, that we are evolving or gaining something (money, spirituality, friends, values, etc), or in this big fight, or are these big persons, or doing this important stuff, whatever. All that are, in this perspective, just illusions, so that we'll keep on feeding those that keep us here.
Kind of frighting but also appealing in the sense that we would cease to be the top predator in our world, we eat animals and vegetables but someone is eating us in a very important and real sense, so it would be all part of a more or less harmonious scheme (for those able to see being eaten as something natural).
One of the most curious possibilities is that life is, like any other fundamental entity, indestructible. So any one would be unavoidably immortal. Now this seems good to us that only live an incredible small fraction of what we would like to live. Probably we would like to live millions of years. But after billions of billions of billions of years, or infinitely more than that, it is easy to imagine that everything gets quite boring to an all-encompassing mind. So these "gods" (I call them gods because they have some characteristics similar to the traditional concept of a god) would be so bored that they wold make a reality where they were more limited, forgetful, even mortal, so that they could partially escape their immortality and totally escape their boredom. In this perspective we can imagine that this universe is only one of a set of infinite universes designed and used by these beings as one of the ways to avoid boredom. We may also imagine that they could kill themselves, perhaps "incarnating" or "downloading" into such a limited life would amount to suicide (if they could not return to their previous "selves"), or perhaps it was a way to avoid suicide (if all the experiences they had could be integrated in their all-encompassing mind). The eternal Gods could also be a result of development, that is, they might have been born, although immortal. They also might be mortal but with lifespans so large that would result in a similar problem and solving strategy.
An extension of the above idea is that there is only One Life, a single Life, a single I, a single Consciousness. Once again, this single Consciousness might get incredibly bored after a very long time. But this time it is even worse, because, being all alone, might be worse than being bored, it might be the most awful experience we may imagine, something worse than our worse nightmare, an endless prison with no chance of communicating. So, it would make sense to create all these lives, worlds and adventures to get rid of that hellish feeling of infinite loneliness.
Another plausible hypothesis is derived from the natural evolution of life. We see that new species don't simply replace old ones. Many times they co-exist. So it seems likely that, along with beings living on spaceships and able to escape the natural death of their original "mother-star", their fellow-species, from simple herbivors and carnivores to the ones based on civilization (cities and culture), would continue to exist, dependent on their home planet. Now, out of pity or by insistent requests, instead of simply letting these inhabitants die with the death of the star, they might be able to offer them a life among the stars... but how could they be satisfied witout the presence of their mother nature and stimulating adventures? To make them, not only happy, but viable, it would make sense to recreate, even artificially, something akin to their home planet. A way to preserve ancient forms of existence throughout the universe's history.
Many of the previous possibilities could be endlessly developed into infinite subcases. But I think that there are so many other kinds of possibilities. Many of which we cannot even imagine, just as some centuries ago we could not imagine more than three spatial dimensions and where, therefore, Stephen Hawking's idea of a universe inside another universe with dimensions orthogonal to the first, would be impossible. Even the concept of simulation is relatively recent. So it is quite unclear how many other kinds of stories we can imagine for explaining the origin of our, conceivably, simulated world.
I must stress that, of course, nothing of this proves or even augments the probability that we are in fact living inside of a simulation. The fact is: we simply don't know!