Loot system

A Loot System is any method to distribute items amongst a group of players. Whenever two or more players share some reward, they participate in a loot system, even if it's only the default roll system from Blizzard. Frequently, the terms DKP and "loot system" are used interchangeably, because DKP based systems are the most widely used type of formal loot systems.

Loot System Categories
There are two basic methods to earn DKP income: standard and zero-sum. There are also two basic methods to determine loot order (who gets items first): bidding and non-bidding. Each income method can in theory be combined with each loot order determination method (although a combination of zero-sum with bidding would be highly unusual). A third grand variety of loot systems use no DKP at all.

Earning DKP

 * Standard Income
 * The Standard DKP income method hands our rewards for various reasons (e.g. timely login, time spent raiding, boss kills, staying for the duration etc.).


 * Zero-sum
 * The standard method's main drawback is that the income needs awareness and tweaking (particularly scaling boss rewards needs attention). Zero-sum DKP hands out DKP only after a boss kill by immediately distributing back any points spent to the players present.

Spending DKP

 * Bidding systems
 * Bidding systems hold an auction for each drop.


 * Non-Bidding systems
 * Without bidding, usually the raid member with the highest current DKP score interested in the item gets it. In Relational DKP loot order is determined by the quotient of DKP earned and spent. Some systems use the DKP scores as die roll modifiers, and interested members decide by rolling who gets it. In all these systems, the item price is either a Fixed price or a Variable price, the latter being usually all or some fraction of the points of the winner.


 * Non-DKP systems
 * There are many Other loot distribution systems not using DKP, ranging from Blizzards standard roll system to merit systems (e.g. Suicide Kings), and the extreme ends of the scale - "Quickest fingers win" and Loot Council.

Loot System Discussion
Loot systems are frequently the subject of heated debate, adherents advocating their own preferred system with something approaching religious fervor. Players sometimes choose to leave or to join a guild primarily on the basis of its loot system. This debate is so wide-spread and returns so consistently in forums that it deserves a deeper look. The following section is based on the massive thread "I will tear apart your Guild loot system" by Angelie (human priest from US Ner'zhul) in the official forums. The original thread has vanished, but returned as a sticky. Unfortunately that new version lacks a few of the finer points. The quintessence remains the same: "No loot system is perfect".

Why use a formal Loot System at all?
When not using a formal system, loot distribution is basically random, which sooner or later leads to regular players getting unhappy. Players like to plan their gear, and want to be compensated for not getting an item.

Formal loot systems can help to solve this problem. Their basic function is to provide a memory for past achievements and rewards gained. They give some compensation for raid members who didn't get some item by increasing their chance to receive future loot. The grand goal is to provide an automatism which leads to "fair" loot distribution over a longer timespan.

Two fundamental system-inherent issues pester any formal loot system: the DKP Gap and Collusion.

Characteristics
The following is a list of fundamental desirable characteristics which all loot systems strive to achieve:


 * 1) Avoid drama
 * 2) Sustain raid progress
 * 3) Items go to those who benefit most
 * 4) Upgrades (even minor ones) for any raid member are not disenchanted
 * 5) Elegant, easy to understand and consistent
 * 6) A fair balance exists between effort spent and reward gained

Standard
The most widely spread loot system uses standard DKP on the income side, and a bidding system when it comes to loot distribution. This offers the maximum flexibility for both sides - guild and raid leaders may reward whatever they feel appropriate, and raid members pay exactly what they think the item is worth. In an ideal world, such a system would fulfill all of the above requirement perfectly.

The DKP Gap
This effect is also known as "Inflation", which is not quite appropriate. Inflation in a real economy means rising prices and devaluation of income, while in a DKP system, the effect means that new members have too low DKP scores to buy good items. A whole genre of DKP systems was invented to counter this effect, the Zero-sum DKP. They guarantee that inflation in the real world meaning cannot occur. Unfortunately, as Anglie pointed out in her article, the actual problem in loot systems has nothing to do with real-world inflation, but deserves a different name - the DKP Gap exists in Zero-sum systems too.

Assume that in a zero-sum, fixed-price system some veteran has (after maybe 30 MC runs) luckily won his full Tier 1 set, and now a current score of -100. The 8 pieces had a value of 460 points. A newbie (equipped in Dungeon Set 1) enters the system at 0 points. Although the visible difference in DKP between the two is -100, and the newbie seems to have a point lead over the veteran, the real gap is actually 360 points. The newbie has to equip himself, paying the fixed prices for his gear, while the veteran accumulates points, and only rarely takes an item. When the newbie finally acquires his 8 pieces of Tier 1, the veteran meanwhile either has some Tier 2 items, or a very obvious point lead. This game of hare and hedgehog can continue indefinitely - on top-of-the-line drops, the veteran will always have priority over the former newbie, even after both players contributed the same for several months.

In effect, the zero-sum, fixed price system fails to acheive its set goal, it is by no means "fairer" to the new raid member as a traditional system, where the veteran has an obvious point lead. In a bidding system, after a few runs the newbie acutally has a chance to win an item by bidding, and can gradually close the gap by getting items cheaper than the veterans.

The DKP Gap is probably the single biggest problem which loot distribution systems use to have. Many people have objections against all formalized loot systems because they fear to find themselves in this very situation - being behind in the priority list, with no possibility to do anything about it. In a zero-sum fixed price environment, it may even be the best possible course for a newbie to run with his initial group until his chance to get meaningful drops becomes very low, and then simply look for another guild where he can enter the system at zero, and his chances for good loot are better.

This problem is by no means accidential, it's rather a case of a job too well done. Loot systems are meant to provide a memory. A fixed and unattainable DKP gap means that the memory is too good. Some people actually feel that such a situation is just, and doesn't really need a solution - the veterans did contribute more to the guilds progress after all.

Collusion
In real world economics, collusion means price fixing. This very effect can easily happen in a bidding system. There's quite a large number of drops which is interesting only for a certain combination of class and build (e.g. plate items with int are useful only to holy paladins), while there are other items which are wanted by a large number of raid members (e.g. a necklace with int and spellpower may be wanted by any healer). Now assume the raid has only two holy paladins. It would be natural for the paladins to agree on the plate items to simply take turns - whenever they're both in the same raid, one bids the minimum amount, and the other passes. This saves them a lot of points, which they can use to bid on the cross-class items, therefore gaining an advantage over the other healers which may have more competition for class specific items. Another example for collusion is if some high-profile raid member (e.g. an officer) bids, and all others interested in the item pass out of courtesy.

These two cases are explicit collusion, people willingly agree to a lower-than-appropriate price. There's also implicit collusion, for example if by chance some item drops many times, or if one class is all alone (e.g. tree or moonkin druid). Items are too cheap in these cases by accident, the players paying these too-low prices gain an advantage over other members of the system nontheless.

Non-bidding systems make collusion systematically impossible, usually at the price of disenchants. By setting a pre-defined price for each item, it's simply impossible to manipulate. Unfortunately, this leads to situations where an item which is only a minor upgrade, sidegrade or situationally useful is disenchanted, because the fixed price is considered to be too high. Disenchanting is always bad, because even a fractional increase in efficiency sums up over time, and some players happiness is greatly increased if they have a nice collection of off-spec epics sitting in the bank. Some raids offer such items at a discount, but this immediately brings back the collusion problem (and/or lengthy discussions whether some item really is an upgrade or not). Discounts may even lead to the perverse situation that in the long run players have better gear for their off-spec than for their main spec (because they are reluctant to pay high prices for main items, and get offspec items cheap). A second big problem of fixed price systems is to find and maintain an appropriate price for hundreds of items (although this can be solved rather elegantly by using one standard price for all items).

Taxes
The DKP gap can be traced back to the system having too good a memory. Collusion is caused by peoples wish to save their points for some later time. Both of these reasons can be solved by introducing a DKP decay over time. A good starting point would be to deduce 5% from all raid members DKP score every week.

By this, the memory of past achievements slowly fades away, and after a few months of consistent raiding, new members are able to compete for top items. At the same time, the willingness to spend DKP is increased, thus collusion is less interesting. Additionally, any advantage gained by collusion also fades away sooner or later.

The problem with taxes is that DKP rich longterm members may feel treated unfairly when they wait for a certain item which by bad luck simply doesn't drop, and feel punished when their hard earned points just melt away for nothing. In practise though, most DKP systems are reset regularly (frequently when entering a new instance). This DKP reset is actually a rather crude form of tax, and also leads to longterm members losing their points.