The last decades have seen a surge of robots working in contact with humans. However, until now these contact robots have made little use of the opportunities offered by physical interaction and lack a systematic methodology to produce versatile behaviours. Here, we develop an interactive robot controller able to understand the control strategy of the human user and react optimally to their movements. We demonstrate that combining an observer with a differential game theory controller can induce a stable interaction between the two partners, precisely identify each other’s control law, and allow them to successfully perform the task with minimum effort. Simulations and experiments with human subjects demonstrate these properties and illustrate how this controller can induce different representative interaction strategies.