Wick Approximation of Quasilinear Stochastic Differential Equations

  • Yaozhong Hu
  • Bernt Øksendal
Part of the Progress in Probability book series (PRPR, volume 38)

Abstract

For a \( \varepsilon \, >\,0 \) be a smooth approximation to 1-dimensional Brownian motion \( \left\{ {W_s^\varepsilon } \right\}s \geqslant 0 \). We consider the equation
$$ X_t^\varepsilon = \eta + \int\limits_0^t {\sigma (s,X_s^\varepsilon )\diamondsuit W_s^\varepsilon ds + \int\limits_0^t {b(s,X_s^\varepsilon )} } ds;\,0\, \leqslant \,s\, <\,\infty $$
(1))
where ◇ denotes the Wick product. It is conjectured that (with reasonable conditions on b and σ) a unique strong solution \( X_t^\varepsilon \) exists for all ε and that \( X_t^\varepsilon \to {X_t}\,as\,\varepsilon \, \to \,0\,(i.e.,\,W_s^\varepsilon \, \to \,{W_s}) \), where X t is the solution of the Itô differential equation
$$ {X_t} = \eta + \int\limits_0^t \sigma (s,{X_s})d{W_s} + \int\limits_0^t {b(s,{X_s})ds;\,0\, \leqslant \,s\, <\,\infty } $$
(2))
We prove the conjecture in the quasilinear case, i.e., where σ(s, x) = σs x, where σs is independent of x.
The conjecture should be compared to the Wong-Zakai theorem, which says that if we let \( Y_t^\varepsilon \) be the solution of the stochastic equation (with o replaced by ordinary product)
$$ Y_t^\varepsilon = \eta + \int\limits_0^t \sigma (s,Y_s^\varepsilon )W_s^\varepsilon ds + \int\limits_0^t b (s,Y_s^\varepsilon )ds;\,0\, \leqslant \,s\, < \,\infty $$
(1)’)
then \( Y_t^\varepsilon \to {Y_t} \), where Y t is the solution of the Stratonovitch differential equation
$$ {Y_{t}} = \eta + \int_{0}^{t} {\sigma \left( {s,{Y_{s}}} \right)} \circ d{W_{s}} + \int_{0}^{t} {b\left( {s,{Y_{s}}} \right)ds;0 \leqslant s} < \infty $$
(2)’)

Keywords

Stochastic Differential Equation Wiener Space Unique Strong Solution Wiener Measure Stochastic Differential Equa 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

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Copyright information

© Birkhäuser Boston 1996

Authors and Affiliations

  • Yaozhong Hu
    • 1
  • Bernt Øksendal
    • 1
  1. 1.Department of MathematicsUniversity of OsloOsloNorway

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