Strong approximations of BSDEs in a domain
Bouchard, Bruno ; Menozzi, Stéphane
Bernoulli, Tome 15 (2009) no. 1, p. 1117-1147 / Harvested from Project Euclid
We study the strong approximation of a backward SDE with finite stopping time horizon, namely the first exit time of a forward SDE from a cylindrical domain. We use the Euler scheme approach of (Stochastic Process. Appl. 111 (2004) 175–206 and Ann. Appl. Probab. 14 (2004) 459–488). When the domain is piecewise smooth and under a non-characteristic boundary condition, we show that the associated strong error is at most of order h1/4−ɛ, where h denotes the time step and ɛ is any positive parameter. This rate corresponds to the strong exit time approximation. It is improved to h1/2−ɛ when the exit time can be exactly simulated or for a weaker form of the approximation error. Importantly, these results are obtained without uniform ellipticity condition.
Publié le : 2009-11-15
Classification:  backward SDEs,  discrete-time approximation,  first boundary value problem
@article{1262962228,
     author = {Bouchard, Bruno and Menozzi, St\'ephane},
     title = {Strong approximations of BSDEs in a domain},
     journal = {Bernoulli},
     volume = {15},
     number = {1},
     year = {2009},
     pages = { 1117-1147},
     language = {en},
     url = {http://dml.mathdoc.fr/item/1262962228}
}
Bouchard, Bruno; Menozzi, Stéphane. Strong approximations of BSDEs in a domain. Bernoulli, Tome 15 (2009) no. 1, pp.  1117-1147. http://gdmltest.u-ga.fr/item/1262962228/