probability

Understanding Caratheodori Extension Theorem

In order to build adequate models of economic and other complex phenomena, we have to take into account their inherent stochastic nature. Data is just the appearance, an external manifestation of some latent processes (seen as random mechanisms). Even though we won’t know the exact outcome for sure, we can model general regularities and relationships as a result of the large scale of phenomena. For more ideas see (Ruxanda 2011)