Simulation hypothesis is a theory which is available in both philosophy as well as science.

There is a long philosophical and scientific history to the underlying thesis that reality is an illusion. This skeptical hypothesis can be traced back to antiquity; for example, to the "Butterfly Dream" of Zhuangzi, or the Indian philosophy of Maya.

At science side it can be called as Simulated reality. This Qn intends to know the philosophical side of it.
For uninitiated, this concept has been made popular (not discovered) by a very famous scientist & businessman Elon Musk recently. See the first 2 minutes of this interview. To explain in brief:

45 years ago, Pong took the world by storm. The high-tech video game was bouncing a white ball between two white paddles. It was that simple and that technologically primitive. 45 years later, in 2017, we have high-tech video games. On 4K screens with intense graphics, video games are becoming more and more lifelike. Now, imagine how much video games and tech will evolve over the next 10,000 years (when looking at 45 years of progress). Based on history, we will eventually create a video game that is so lifelike, it is mistaken for reality. And that video game will be invented. And we will have successfully created a simulation that another group of “things” (I am hesitant to say people) live in.

So why do we assume we are the first? Based on our own progress, we have to assume that someone else did it first. The chances we are the first are one in a billion. This means another group of “things” created a simulation that we call our lives.

If this is believed to be true, then I writing this post & you reading it, is also a simulation!

On philosophical side, let's not marginalise ourselves as merely a game. However, we can surely theorise ourselves as "simulated ones".
Do we have scriptural references for this phenomenon?

Note: This concept has been explored in scientific way in the movies like Matrix & source code And philosophically in Inception.

There are some Self-similarity patterns which describe it the best. For example, below patterns are similar to the Qn. A simulation inside a simulation inside a simulation inside a simulation ... enter image description here

Or a tree with a branch, which is a tree with a branch, which is a tree with a branch, ...

enter image description here

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    I think your question reduced to "Do our scriptures say the world is illusion?" – Turiyanāth Aug 7 '17 at 6:24
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    @Rohit., yes you are right. After your comment, I thought of closing it as duplicate, because there is a high probability of such Qn being already asked. Upon searching it, I found a related Qn for now: What is maya and why is it there?. Actually that post asks "Why is world an illusion?", and my Qn removes "Why". – iammilind Aug 7 '17 at 6:37
  • @iammilind - Your question is slightly different.It's more close to "Matrix" the movie.Do check this question.This legend is related to your question. – SwiftPushkar Aug 7 '17 at 7:05
up vote 9 down vote accepted

I discuss in my answer here, AtharvaVeda states Universe as like projection in space-time:

पूर्ण कुम्भोदिः काल आहितस्तं वै पश्यामो बहुदा नु सन्तः । [AtharvaVeda 19.53.3]

A full pot has been placed in Time and it is that which we see manifoldly.

Similarly as I discuss here, RigVeda states the present creation is similar like the past creation:

The Ordainer created the sun and moon like those of previous cycles. He formed in order Heaven and Earth, the regions of the air, and light.

And RigVeda also states it is Indras (Gods) form seen as many due to Maya, which I discuss here:

रूपं-रूपं परतिरूपो बभूव तदस्य रूपं परतिचक्षणाय |
इन्द्रो मायाभिः पुरुरूप ईयते युक्ता हयस्य हरयःशता दश || (RigVeda 6.47.18)

In every figure he hath been the mode: this is his only form for us to look on. Indra assumes many form by his Maya, for his Bay Steeds are yoked, ten times a hundred.

Combining all these three statements at the same time we can get strong hint of Universe being like a simulation type, although this may not exclusively prove that  Universe is simulation.

In the Yoga-Vasistha there is a story which very much resembles the above description given in the story. In this story Indra enters inside atom and he forms his Kingdom inside that atom through his imagination. But that imagination formed world begins to work like real world and other Indras (his sons) also begin to rule in that place. Book VI chapter 13 of Yoga-Vasistha contains this story and is as:

At one time the great Indra, the lord of the gods, lived in that fruit, just like a big mosquito lives in an empty pot as the great leader of its company of small gnats. But this great lord was weakened in his strength and valor by his study and his teacher’s lectures on spiritualism, which made him a spiritually minded person and a seer in all past and future matters. It happened once upon a time, when the valiant god Narayana and his heavenly host had been resting and their leader Indra was weakened in his arms, that the demon asuras rose in open rebellion against the gods. Then Indra rose with his flashing arms and fire and fought for a long time with the strong asuras. At last Indra was defeated by superior strength and fled from the field. He ran in all ten directions, pursued by the enemy wherever he fled. He could find no place to rest, just as a sinner has no resting place in the next world. Then as the enemy lost sight of him for a moment, he made use of that opportunity. He compressed the thought of his big body in his mind and became a minute form on the outside. Then through his consciousness of his personal minuteness, he entered the womb of an atom which was glittering amidst the expanse of solar rays, like a bee entering a lotus bud. He immediately rested in that state and his hope of final bliss in the next. He utterly forgot the warfare and attained the ultimate bliss of nirvana. In that lotus and instantly in his imagination, he conceived his royal palace. He sat in lotus posture as if resting on his own bed. Then Indra, seated in that mansion, saw an imaginary city containing a grand building in the middle, its walls studded with gems, pearls and coral. From within the city, Indra saw a large country all around containing many hills and villages, pasture grounds for cattle, forests and human dwellings. Then Indra felt a desire to enjoy that country he had formed in his imagination, with all its lands and hills and seas. Afterwards Indra conceived a desire to possess the three worlds, together with all the earth and ocean, sky and infernal regions, the heavens, planetary spheres above and mountain ranges below. Thus did Indra remain there as lord of the gods in possession of all abundance for his enjoyments. Afterwards, a son was born to him named Kunda, of great strength and valor. Then at the end of his lifetime, this Indra of unblemished reputation left his mortal body and became extinct in nirvana, like a lamp extinguished for lack of oil. Kunda reigned over the three worlds. Then, having given birth to a boy, he departed to his ultimate state of bliss after the end of his life term. That son also ruled in his time, then departed at the end of his lifetime to the holy state of supreme bliss. He also left a son after him. In this manner a thousand generations of grandsons of the first Indra have reigned and passed away in their time. There is still a prince named Ansaka reigning over the land of the lord of the gods. Thus generations of the lord of immortals still hold sovereignty over the imaginary world of Indra in that sacred particle of sunbeam in empty air. That atomic particle is continually decaying and wasting in this long course of time.

This story clearly gives account of very advanced simulation world formed by Indra.

As a sidenote, Adi Shankara in his Dakshinamurty Stotram also states that Universe is like a city seen within mirror and happening inside one's self:

The Entire World is Like a City Seen within a Mirror, the Seeing happening within One's Own Being, It is a Witnessing happening within the Atman, (the Witnessing) of the Externally Projected World; Projected by the Power of Maya; As if a Dream in Sleep, One Experiences this Directly (this Play of Maya) during Spiritual Awakening within the Non-Dual Expanse of One's Own Atman,

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    Story of Indra has striking resemblance with simulation. More than expected. – iammilind Aug 8 '17 at 14:36
  • @iammilind Yoga Vasista has many such stories. You can read complete (Brihat) Yoga Vasista (long version). – The Destroyer Aug 8 '17 at 14:56
  • What a fabulous answer! Yog Vasishth indeed is a treasure trove of interesting stories. – Dr. Vineet Aggarwal Sep 24 at 9:08

Sankaracharya stated "bramha satyam, jagat mithya". So yes, the observable universe is a simulation.

See Help me to find out the verse : "Brahma satyam jagat mithya, jivo brahmaiva naparah"

We are also informed that Vishnu in repose is actually dreaming of the whole universe and we are a part of His dream. (Caveat: this is mostly a ISKCON interpretation. Ref: Are there any references to the Brahma Samhita before Chaitanya Mahprabhu?)

On a lighter note, there was a scholar who was giving a discourse in an open space on truth, illusion etc. An elephant ran amok into the crowd and everyone ran away scared. After things got settled down a bit a wise guy asked the scholar humbly " sir, if everything is illusion, then why did you run from the elephant? Isn't elephant also an illusion". The scholar jokingly replied "gajam mithya, palAyanam mithya".

See also Holographic principle.

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    Good answer. I think the transliteration of quote has to be slightly corrected & put into a block quotes. – iammilind Aug 8 '17 at 3:43

From Vijnabhairava tantra:

Bhairava said: Good! Good! Dear one. you have put questions which pertain to the very quintessence of Tantra. Though. the matter is most esoteric, oh auspicious one, yet shall I explain it to you. Whatever has been declared to be the composite form (Sakala) of Bhairava, that oh goddess should be considered as insubstantial (asarataya), as phantasmagoria (lit. as the net of Indra), as magical illusion (maya), as dream, as the mirage of a town of Gandharvas in the sky. The sakal a aspect of Bhairava is taught, as a prop for meditation, to those who are of deluded intellect, who are interested in ostentatious performance of rituals, it has been declared for those people who are a prey to dichotomising thought-constructs. Verse 7-10.

All manifestation from gods down to the mineral is known as sakala. Sakala is the sphere of maya tattva. It consists of bheda-difference or division. The essential nature of Bhairava cannot be known by means of sakala which consists of difference and division.

Also, In Anuttarshtika of Acharya Abhinavgupta on verse 2 says as follow.

In reality there is no such thing as birth and death, so how can the question arise of bondage for living beings? There never was any such bondage for the one who is entirely free, and therefore, to struggle for liberation is useless and nothing more than delusion–like a dark shadow mistaken for a demon, or a rope seen as a snake. It is all based on deceitful perception which has no substance. Neither abandon nor accept anything, remain as you are, well established in your own Self.

So he said there is no birth or death, it is just a deceitful perception. Moreover, in the last sentence he asked to remain as you are - neither accept nor reject anything which is nothing but stopping of simulation. Stoppage of mental simulation is liberation.

Found an explicit mention in Bhagavad Gita itself! Where lord says that of all the beings are illusioned and are mounted on machines. May be it's an analogy, but may be it's not.

ईश्वरः सर्वभूतानां हृद्देशेऽर्जुन तिष्ठति। भ्रामयन्सर्वभूतानि यन्त्रा-रूढानि मायया

BG 18.61 - O Arjuna, the lord resides in hearts of all beings; Through illusion(mAyA), all beings are wandering mounted on a machine.

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