DANIEL W.DREZNER 713 some types of concessions have very poor or expensive substitutes.Political assets are more heterogeneous and less substitutable than economic assets.Concessions that transfer information,institutional access,or asset-specific investments alter the local distribution of power in a way that other power resources cannot without serious political externalities.Second,the assumption of fungible power is not necessarily true in the short run.It may be possible to redirect power resources toward a particular target,but it cannot be done immediately,and there are associated opportunity costs with it.While states must keep the aggregate distribu- tion of power in mind,they will be more concerned about the local correlation of forces and policy levers. The importance of relative transfers depends on the expectation of future conflict.If the concession is significant but the number of expected disputes in the bilateral relationship is small,the relative distribution of payoffs will matter less. Previous game-theoretic models have highlighted the importance of conflict expec- tations.Robert Powell(1991)argues that relative gains concern is salient when a military attack is expected.The logic developed here includes instances beyond military force,but is consistent with Powell's argument.Duncan Snidal (1991) concludes that relative gains concern will be salient when the locus ofa foreign policy leader's attention is on the bilateral dispute.A high expected probability of future confrontations and threats from another state will lead to an enhanced concern for relative gains in bilateral dealings with that state. Conflict expectations will also affect states through their concern over their bargaining reputation.In a future conflict,foreign policy leaders will consider the history of prior bilateral negotiations in developing conjectures about the other states'behavior.For example,if a country has a history of acquiescing in the face of deadlock,the other country will have the incentive to act tough in crises,so as to obtain a better outcome.By contrast,if that state has a history of refusing to fold even if that action is costly,the other foreign policy leader will take that history into account in later rounds of negotiations. If a nation-state demonstrates that it prefers to incur a costly outcome,provided it hurts the other side even more,it can affect the outcomes of those future conflicts. Furthermore,reputations are interdependent;one state's boost in reputation can come at the expense of the other.In a crisis,whichever side backs down is perceived to have lost credibility.At the same time,the side that triumphed will find its credibility enhanced.Therefore,leaders must be concerned that backing down in the present will raise the other state's expectation of success in later episodes.States will care about the distribution of payoffs in the present because it will alter their perceived reputations in the other state. Reputation becomes more important as the expectation ofrepeated interactions, and the shadow of the future,increases.If players anticipate that a game will be played often,they will be more willing to sacrifice current gains for a larger payoff in the future.Countries will always have some incentive to be concerned about their reputation.Nevertheless,the incentive will be much stronger when they expect a greater number of potential conflicts.States have both tangible and abstract reasons to factor in conflict expectations when crafting their existing strategies. Casual empiricism suggests that the expectation of future conflict varies with the dyad.For example,during the Cold War,the United States clearly expected more zero-sum disputes with the Soviet Union than with West Germany.At present,India can anticipate a greater number of disagreements with Pakistan than with Bangla- desh.For the foreseeable future,the United States is more concerned with a possible North Korean nuclear program than a probable Israeli nuclear program.In each of the cases where more future conflict is expected,one or both states perceive a significant threat from the other.In relationships where threat perception is high, so is the expectation of future zero-sum conflicts.some types of concessions have very poor or expensive substitutes. Political assets are more heterogeneous and less substitutable than economic assets. Concessions that transfer information, institutional access, or asset-specific investments alter the local distribution of power in a way that other power resources cannot without serious political externalities. Second, the assumption of fungible power is not necessarily true in the short run. It may be possible to redirect power resources toward a particular target, but it cannot be done immediately, and there are associated opportunity costs with it. While states must keep the aggregate distribu￾tion of power in mind, they will be more concerned about the local correlation of forces and policy levers. The importance of relative transfers depends on the expectation of future conflict. If the concession is significant but the number of expected disputes in the bilateral relationship is small, the relative distribution of payoffs will matter less. Previous game-theoretic models have highlighted the importance of conflict expec￾tations. Robert Powell (1991) argues that relative gains concern is salient when a military attack is expected. The logic developed here includes instances beyond military force, but is consistent with Powell's argument. Duncan Snidal (1991) concludes that relative gains concern will be salientwhen the locus of a foreign policy leader's attention is on the bilateral dispute. A high expected probability of future confrontations and threats from another state will lead to an enhanced concern for relative gains in bilateral dealings with that state. Conflict expectations will also affect states through their concern over their bargaining reputation. In a future conflict, foreign policy leaders will consider the history of prior bilateral negotiations in developing conjectures about the other states' behavior. For example, if a country has a history of acquiescing in the face of deadlock, the other country will have the incentive to act tough in crises, so as to obtain a better outcome. By contrast, if that state has a history of refusing to fold even if that action is costly, the other foreign policy leader will take that history into account in later rounds of negotiations. If a nation-state demonstrates that it prefers to incur a costly outcome, provided it hurts the other side even more, it can affect the outcomes of those future conflicts. Furthermore, reputations are interdependent; one state's boost in reputation can come at the expense of the other. In a crisis, whichever side backs down is perceived to have lost credibility. At the same time, the side that triumphed will find its credibility enhanced. Therefore, leaders must be concerned that backing down in the present will raise the other state's expectation of success in later episodes. States will care about the distribution of payoffs in the present because it will alter their perceived reputations in the other state. Reputation becomes more important as the expectation of repeated interactions, and the shadow of the future, increases. If players anticipate that a game will be played often, they will be more willing to sacrifice current gains for a larger payoff in the future. Countries will always have some incentive to be concerned about their reputation. Nevertheless, the incentive will be much stronger when they expect a greater number of potential conflicts. States have both tangible and abstract reasons to factor in conflict expectations when crafting their existing strategies. Casual empiricism suggests that the expectation of future conflict varies with the dyad. For example, during the Cold War, the United States clearly expected more zero-sum disputes with the Soviet Union than with West Germany. At present, India can anticipate a greater number of disagreements with Pakistan than with Bangla￾desh. For the foreseeable future, the United States is more concerned with a possible North Korean nuclear program than a probable Israeli nuclear program. In each of the cases where more future conflict is expected, one or both states perceive a significant threat from the other. In relationships where threat perception is high, so is the expectation of future zero-sum conflicts