Analysis of the application of probability in the field of economy

Abstract

In recent years, with the advancement of technology and the increasing complexity of financial markets, probability theory plays a crucial role in understanding the economic market and the law. Financial markets are highly volatile and subject to various external factors, making accurate predictions and risk management strategies essential for success. Therefore, in the field of economics, probability theory is widely applied to risk management, investment decisions, and market forecasting. This application provides both theoretical support and practical guidance for decision-making, leading to more effective resource allocation and policy formulation. This paper explores the various applications of probability in the market economy, focusing on its significance and impact by using the literature excerpting method, which involves analyzing existing literature to gain insights and draw conclusions. Through this method, the paper aims to provide a comprehensive overview of how probability theory influences decision-making in the market economy, highlighting its importance in shaping economic outcomes.