The Simulation argument is an argument for the simulation hypothesis, which states we are living in a simulation. The concept was popularized in 2003 by Nick Bostrom's paper "Are You Living in a Computer Simulation?"1.
In this paper Bostrom constructs, in much more detail, the line of reasoning below. If posthuman civilizations have enough computing power to run hugely many ancestor‐simulations using a tiny fraction of their resources, it’s reasonable to assume they would certainly run many of such simulations. Therefore, there would be many more simulated minds than non-simulated. For instance, if they run 1000 complete simulations of our civilization, then there would be 1000 many more simulated minds then non-simulated ones. Hence, since simulated and non-simulated minds are subjectively indistinguishable, one doesn’t have any a priori reasons to think he is one or another. However, given the abundance of simulated minds, it's reasonable to believe that one is likely being simulated. Bostrom then concludes that at least one of the following propositions must be true:
It follows that the belief that there is a significant chance that we will one day become posthumans who run ancestor simulations is false, unless we are currently living in a simulation.