Maximum Likelihood Estimation (MLE) is a statistical method used to estimate the parameters of a probability distribution. It works by finding the parameter values that maximize the likelihood of observing the given data. In simpler terms, MLE identifies the parameters that make the observed data most probable under a specific model. This technique is widely used in various fields, including economics, biology, and machine learning. By applying MLE, researchers can make informed predictions and decisions based on their data, ensuring that their models are as accurate as possible.