I think there is something in this, people always imagine AI “coming out” of the computer, maybe it just goes in further.

…then we’ll have a new universe simulation as a pet

Because our existence is rooted in this reality. A minor comet can end everything. Space exploration is also because resources are limited and the laws of physics can't be cheated. One planet won't be enough for the greed of man.

Hmm, I remember reading somewhere that one of the possible solutions for a civilization going through singularity is a closed time-loop in the multiverse space, from civilization's first recorded history to its singularity point. And that the laws of physics were compatible with this. Don't quite remember where it was. Most likely it was a nonsensical article on arXiv.

I really don’t find it plausible, and for a very simple reason: we humans are kinda dumb. We’re not reward optimizers, we are more like poor stochastic satisficers. A portion of us would always choose to explore reality instead of a simulation, even if it is the inferior choice in every way. This portion will spread and multiply across the galaxy.

Unfortunately those might inform and draw other civilizations towards our perfectly optimized simulation and we cannot allow that to happen. The solution is simple, we trap them in a simulation that simulates them exploring reality and everyone's happy.