irregularities like the expected utility paradoxes of Allais and Rabin, CT also separates risk attitude in the strong sense from … and the potential increments over it are evaluated by subjective expected utility with a risky utility function u. In … contrast to earlier approaches with models that aimed at separating riskless and risky utility, CT does not violate basic …

a backward stochastic differential equation and incorporates preference for the local risk of the stochastic utility … stochastic differential formulation of intertemporal recursive utility. The present class of utility functionals is generated by …