Dominant incentive strategies for hierarchical systems with incomplete information structure

This paper considers the incentive design problem in two-level hierarchical systems with multiple followers whose behavior pattern is uncertain to the leader. We first propose the concept of dominant incentive strategy, which realizes the leader's most desirable outcome in spite of the presence of uncertainty, and then derive its existence conditions and design methods. The theoretical results are applied to designing coordinating mechanisms for a duopoly market under incomplete information.<
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