Bayes' theorem, also called Bayes' rule or Bayesian theorem, is a mathematical formula used to determine the conditional probability of events. The theorem uses the power of statistics and probability ...

Daniel McNulty began writing for Investopedia in 2012. His work includes articles on financial analysis, asset allocation, and trading strategies. Marguerita is a Certified Financial Planner (CFP), ...

Adam Hayes, Ph.D., CFA, is a financial writer with 15+ years Wall Street experience as a derivatives trader. Besides his extensive derivative trading expertise, Adam is an expert in economics and ...

Probability theory constitutes the mathematical framework for quantifying uncertainty and analysing random phenomena. Its foundations lie in measure theory, where a probability space is defined as a ...

Having a strong opinion about an issue can make it hard to take in new information about it, or to consider other options when they’re presented. Thankfully, there’s an old rule that can help us avoid ...

The notion of free energy in inference derives from a mathematical method of inverting a probability distribution. If the brain knows the probability of its sensations (given a “generative model of ...