Optimal incentive strategy for leader-follower games

An optimal incentive strategy by which the leader suffers the least losses in punishing the follower´s deviation from the decision desired by the leader is defined. Sufficient conditions for the existence of optimal incentive strategy are given. Static and dynamic leader-follower games with quadratic cost functionals are investigated. It is shown that leader-follower games with quadratic cost functionals admit optimal incentive strategies under the follower´s decision variable being scalar, there exists a unique linear optimal incentive strategy. Such an incentive strategy can be explicitly determined