Jan 09

Bayes’ Formula - 6 min. tutorial

by David Harper, CFA, FRM, CIPM

Bayes' Formula gives us math for an intuitive idea: that probability can be adjusted to incorporate new information. Technically, it helps us move from an unconditional probability (e.g., "if I know nothing, what is the probability that the economy with grow") to a conditional probability (e.g., "If I come into possession of relevant evidence, what is the adjusted probability that the economy with grow?")