Varadhan, 67, received the NOK 6 million (USD 975,000) prize for "his fundamental contributions to probability theory."
Varadhan teaches at NYU's Courant Institute of Mathematical Sciences, and the award said his theories are useful in a broad range of fields, including quantum field theory, statistical physics, population dynamics, econometrics and finance, and traffic engineering.
In a popularized presentation of Varadhan's work, University of Oslo professor Tom Louis Lindstrøm said large deviations are those results that appear to defy normal odds. For example, if a normal coin were tossed 1,000 times, about half the tosses would be expected to turn up as 'heads.'
"But this need not happen," he wrote. "There is a small - extremely small - probability that the coin will show 'heads' every time. ... The art of large deviations is to calculate the probability of such rare events."
Varadhan's Large Deviation Principle sums up how to apply the techniques to the chances of such unlikely outcomes.
The Abel Prize, first awarded in 2003, was created by the Norwegian government and named after 19th Century Norwegian mathematician Niels Henrik Abel.
