The report, which was issued to clients, also implies even if our world was an illusion, we would never know about it.
Bank of America Merrill Lynch backed up the claims by citing comments from leading philosophers, scientists and other thinkers.
“It is conceivable that with advancements in artificial intelligence, virtual reality, and computing power, members of future civilizations could have decided to run a simulation of their ancestors," the report stated.
Its claims also appeal to the work of a philosophy professor from the University of Oxford. In 2003, Professor Nick Bostrom concluded there is significant possibility we "live in a simulation".
Astrophysicist Neil DeGrasse Tyson also maintains the likelihood of the universe being a simulation “may be very high”.
Philosophers dating back to the 16th century, notably René Descartes, have suggested we cannot rely on our sense experiences to perceive the world.
The Bank of America’s report, which was looking at the implications of virtual reality, explained: “Many scientists, philosophers, and business leaders believe that there is a 20-50 per cent probability that humans are already living in a computer-simulated virtual world.
“In April 2016, researchers gathered at the American Museum of Natural History to debate this notion. The argument is that we are already approaching photorealistic 3D simulations that millions of people can simultaneously participate in.”
In the 1999 film The Matrix, humans live in a simulated reality created by machines to control the human population.
By Jacob Furedi