A New Second-Order One-Step Scheme for Solving Decoupled FBSDES and Optimal Error Estimates

A New Second-Order One-Step Scheme for Solving Decoupled FBSDES and Optimal Error Estimates

Year:    2020

Author:    Yang Li, Jie Yang, Weidong Zhao

East Asian Journal on Applied Mathematics, Vol. 10 (2020), Iss. 2 : pp. 354–380

Abstract

A novel second-order numerical scheme for solving decoupled forward backward stochastic differential equations is proposed. Unlike known second-order schemes for such equations, the forward stochastic differential equations are approximated by a simplified weak order-2 Itô-Taylor scheme. This makes the method more implementable and enhances the accuracy. If the operators involved satisfy certain commutativity conditions, the scheme with quadratic convergence can be simplified, which is important in applications. The stability of the method is studied and second-order optimal error estimates are obtained.

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Journal Article Details

Publisher Name:    Global Science Press

Language:    English

DOI:    https://doi.org/10.4208/eajam.280519.180919

East Asian Journal on Applied Mathematics, Vol. 10 (2020), Iss. 2 : pp. 354–380

Published online:    2020-01

AMS Subject Headings:   

Copyright:    COPYRIGHT: © Global Science Press

Pages:    27

Keywords:    FBSDEs simplified weak Itô-Taylor scheme second-order scheme error estimate.

Author Details

Yang Li

Jie Yang

Weidong Zhao

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