SDEs (Stochastic Differential Equations)

Stochastic Differential Equations (SDEs) are mathematical equations that describe systems influenced by random processes or noise over time. Unlike regular differential equations, which model predictable changes, SDEs incorporate uncertainty, making them useful for fields like finance, physics, and biology. They help us understand how factors like stock prices or population dynamics evolve in unpredictable environments. By using SDEs, we can make informed predictions and analyze the behavior of complex systems under the influence of randomness. In essence, they bridge the gap between deterministic models and the randomness inherent in real-life phenomena.