The question of whether what we call "reality" could be nothing other than a simulation run on a computer gets a mathematically sophisticated treatment in this story. In addition to a vague reference to a mathematical discovery which restores a deterministic explanation to quantum mechanics, the story also addresses more interesting questions such as:
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"But - " said Betsy. "But, can they really do that, and make it work? What happens when our computer tries to model another computer with as much computing power as it has?"
Dr. Torrez smiled. "That's the wonder of efficient data compression. A data set can contain within it a data set that has as much complexity in it as the original data, by encoding it within the redundancies of the original data. And the real universe is full of redundancy."
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Originally published in Asimov's Science Fiction magazine in 1997, it was reprinted in the collection Impact Parameter.
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As you might have guessed from the quote above, the story involves the idea that the beings in the simulation run a computer program in which another universe is simulated and so on. The story concludes with the scary implications of what it would mean if this chain looped back on itself, so that eventually this universe is itself running on a computer in one of the universes that it is simulating.
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