714 Conflict Expectations A logical extension of this argument is that the concern for relative gains and reputation is inversely correlated with the degree of alignment.Allies will anticipate few disputes,and care less about relative gains and reputation.Adversaries will anticipate frequent threats of conflict,and therefore care a great deal about relative gains and reputation. It is often unclear what theorists mean when they talk about allies,adversaries, or alignment.My definitions are as follows:states are allies if they share a history of cooperation and mutual trust on security and other issues that is not disrupted by shifts in the international distribution of power.States are adversaries if they share a history of discord and conflict on various issues that is not disrupted by large shifts in the international distribution of power.By allies I do not mean states that temporarily join coalitions to fight a common enemy,such as the United States and the Soviet Union in World War II or the United States and Syria in the Gulf War. By adversaries I do not mean states that have highly public but ephemeral spats over a single issue,such as the dispute between France and the United States over the Uruguay round. In sum:the model will assume that states act as rational,unitary utility-maximiz- ers.National preferences are partially motivated by conflict expectations.There are two effects of this expectation.First,states will have some concern for relative gains, because concessions made in the present can be used against nation-states in the future.Second,countries are concerned that conceding in the present will damage their reputation in future interactions.Both of these concerns vary with the expec- tation of future conflict.Therefore,states will care more about relative gains and reputation effects when their perception of threat is palpable.Because states balance against their threats,conflict expectations will be greatest between adversaries. Disputes will also be anticipated between allies,but to a lesser degree. A Game-Theoretic Model of Economic Coercion There are two ways to formalize the conflict expectations model.The first is to assume states are egotistic utility-maximizers with an expectation of a future dispute where the outcome depends on relative capabilities.The second is to create a reduced-form utility function,incorporating the conflict expectations into the actors'utility functions in the form of a concern for relative gains.As Powell (1994:336)observes,there is no a priori answer as to which approach is better.For this article,the reduced-form model will be used for two reasons.First,this version of the conflict expectations model is easier to present and analyze.3 Second,the focus of this article is the effect of conflict expectations on economic statecraft,not on the causes of those expectations. All games must have players,strategies,and payoffs.The coercion game has two actors:Sender and Target,occasionally labeled S andTfor notational convenience.4 These actors are rational and are assumed to have full information about the possible strategies and payoffs.The game is played only once.5 The structure of the game can be seen in Figure 1.Sender moves first;it can elect to do nothing and end the game at Status Quo Ante(SQA),or it can choose to make 3 Versions of the model that are more explicit about the future implications of present concessions produce results that are substantially similar to the reduced-form game presented here.See Drezner,1998. 4 It could be argued that many high-profile coercion efforts do not have just one sender but many.An examination of these events shows that most sanctions episodes have one dominant sender who persuades and cajoles other states into cooperation.For more on this see Martin,1992. 5A different variant of the game used two stages in an effort to incorporate the shadow of the future.The results are not fundamentally affected.'114 ConJlict Expectations A logical extension of this argument is that the concern for relative gains and reputation is inversely correlated with the degree of alignment. Allies will anticipate few disputes, and care less about relative gains and reputation. Adversaries will anticipate frequent threats of conflict, and therefore care a great deal about relative gains and reputation. It is often unclear what theorists mean when they talk about allies, adversaries, or alignment. My definitions are as follows: states are allies if they share a history of cooperation and mutual trust on security and other issues that is not disrupted by shifts in the international distribution of power. States are adversaries if they share a history of discord and conflict on various issues that is not disrupted by large shifts in the international distribution of power. By allies I do not mean states that temporarily join coalitions to fight a common enemy, such as the United States and the Soviet Union in World War I1 or the United States and Syria in the Gulf War. By adversaries I do not mean states that have highly public but ephemeral spats over a single issue, such as the dispute between France and the United States over the Uruguay round. In sum: the model will assume that states act as rational, unitary utility-maximiz￾ers. National preferences are partially motivated by conflict expectations. There are two effects of this expectation. First, states will have some concern for relative gains, because concessions made in the present can be used against nation-states in the future. Second, countries are concerned that conceding in the present will damage their reputation in future interactions. Both of these concerns vary with the expec￾tation of future conflict. Therefore, states will care more about relative gains and reputation effects when their perception of threat is palpable. Because states balance against their threats, conflict expectations will be greatest between adversaries. Disputes will also be anticipated between allies, but to a lesser degree. A Game-Theoretic Model of Economic Coercion There are two ways to formalize the conflict expectations model. The first is $0 assume states are egotistic utility-maximizers with an expectation of a future dispute where the outcome depends on relative capabilities. The second is to create a reduced-form utility function, incorporating the conflict expectations into the actors' utility functions in the form of a concern for relative gains. As Powell (1994:336) observes, there is no a priori answer as to which approach is better. For this article, the reduced-form model will be used for two reasons. First, this version of the conflict expectations model is easier to present and analyze.3 Second, the focus of this article is the effect of conflict expectations on economic statecraft, not on the causes of those expectations. All games must have players, strategies, and payoffs. The coercion game has two actors: Sender and Target, occasionally labeled S and T for notational con~enience.~ These actors are rational and are assumed to have full information about the possible strategies and payoffs. The game is played only onceS5 The structure of the game can be seen in Figure 1.Sender moves first; it can elect to do nothing and end the game at Status Quo Ante (SQA), or it can choose to make 3 Versions of the model that are more explicit about the future implications of present concessions produce results that are substantially similar to the reduced-form game presented here. See Drezner, 1998. 4 It could be argued that many high-profile coercion efforts do not have just one sender but many. An examination of these events shows that most sanctions episodes have one dominant sender who persuades and cajoles other states into cooperation. For more on this see Martin, 1992. 5 A different variant of the game used hvo stages in an effort to incorporate the shadow of the future. The results are not fundamentally affected