The perfect death penalty is an extremely effective deterrent, but completely harmless once it has actually happened.
Scrusi, in his comment, finally pointed the dilemma out. Isn't there a perfect symmetry? Isn't it exactly the repercussion, the aftermath, which deters one from dying? The answer is that for a perfectly rational person, this is correct. But fortunately, players aren't perfectly rational.
The trick is to exploit a psychological fault within the human brain; a fallacy, to create a death penalty that is very deterrent, but rather harmless once it it has actually happened. But this won't make the perfect death penalty, of course. Please remember that until your computer mind-controls you, there won't be a perfect death penalty. Humans are just too smart for that.
First, I need to very superficially describe the game the death penalty is embedded in.
There's a player-run castle with lots of player-owned shops. In these shops you buy equipment. You can buy very cheap equipment or very expensive equipment. Expensive equipment gives a rather small boost to your character's effectiveness. There's also an entire virtual world outside that castle, but that is mostly irrelevant for this post.
Now, in the basement of that castle there is the entrance to a vast labyrinth. That's very similar to Diablo, I know. But this is far from an action RPG. You want to venture into this labyrinth to gather resources and stuff you can sell. By doing so you can improve your castle, you own house, finance a war and lots of other stuff. On a side note, you also want to venture down there, because it's an unpredictable adventure and fun in itself.
There's also a very credible weight limit. So, while you venture down there, you will not pick up every plate mail and two-hand sword you see. Instead, you will rather look for gems or whatever is valuable and carry-able. Even if you stay down there for a long time, your backpack will stay rather clear.
And there's the need to carry supplies with you, because your equipment will eventually break. Unless you can repair or replace it down there, you are in trouble. So, remember: All your equipment eventually breaks! All of it. Equipment is just a tool! Nothing lasts forever.
Of course, while you venture down there, there is the usual character power progression. It is highly compressed in this game and a lot of it runs horizontally. That is, you further customize your character, but he doesn't necessarily become more powerful.
The deeper you venture, the more dangerous the enemies are, of course. Also, the deeper you venture the more potential rewards there are. But it is perfectly normal to just venture down there for half an hour. The labyrinth is procedurally generated and the enemies use some basic AI to move around in it. You can explore endlessly without going deeper, if you want. To go really deep, you want to take a well organized, well supplied, group. But it shouldn't be too large, because making a lot of noise is not a good thing when you're really deep.
I know, you love that game already. But please, please! Now comes the topic of this post. If you want to comment, do so on the topic, please ;)
When you die in the labyrinth you lose your stuff and get teleported back into the castle. I know, you hate it and are very disappointed. But here's why that is actually a good death penalty once you emotionally disconnected yourself from WoW.
Shefrin & Thaler, back in 1988, wrote
"[Humans] mentally frame assets as belonging to either current income, current wealth or future income and this has implications for their behavior [..]"That's called mental accounting.
Weight considerations make players necessarily start their adventure only with what they really need and with what they absolutely expect to lose. There's no real emotional punishment once you do lose it.
When you bought that axe to use down there, you already knew that it is going to break eventually. That's why you also had some equipment to fix it once it does. But since it does become ever less effective, you already wrote it off - mentally. A second trip would be started with a new axe, anyway! Nobody would want to buy a used axe! The axe was an investment.
The stuff you found in the labyrinth, may be in your backpack, but it is not safe yet! You need to get to the surface to actually own it! It is potential future economic gain. It is not something that you can lose, because you don't emotionally own it yet!
It's like a guy unexpectedly promising you to give you 100€ if you beat him at poker right now. But unfortunately you lose. From an purely rational point of view (Gevlon will insist!) this is exactly the same like losing the 100€ note you just found on the street. But from an emotional point of view, it's something completely different.
Think about this example for a second.
You'd hate to be prevented from playing the guy, because that felt like losing 100€. (You'd absolutely hate to die, because that would prevent you from carrying your stuff to the surface). But if you actually do play and lose, it's really not that much of a problem, because you didn't actually lose 100€ - at least you don't feel like it. (If you actually do die, it's really not that much of a problem, because you didn't really lose this stuff - at least you don't feel like it.)
Now, this isn't perfect. It might, in fact, make sense to really empathize that your stuff is not truly yours yet. For example, by using a gamey separate backpack, that's called "stuff found so far". Maybe there are ways to do so that are more compatible with the simulation.
This death penalty also has another interesting characteristic. In the last post's comment thread, Eteocles pointed out that the same death penalty can actually be differently harsh. Of course, he's right and this effect should be used to create a good death penalty.
You want the death penalty to be more harsh to those players who like harsher death penalties. Now, some commenters will point out that nobody actually likes a harsh death penalty. The only thing they like about it is that other players have to face it. Call me naive, but while I do agree that this is true for a few players and party true for most players, I don't think it is entirely true.
The proposed death penalty becomes ever harsher the deeper you go. You lose more invested time and you probably lose more valuable items should you die.
And since you are likely to be in a group, if you venture beyond a certain depth, your loss will be shared. "Do you remember when we found that big red gem at level 50? And then we went on to level 51 and the big troll army ran us over from behind? We were so like ooggh!".
Shared loss isn't even necessarily bad! It creates memorable moments. Read Elder Game if you want to know why that is very important. Memorable moments make players resubscribe after a break.
Finally, this death penalty is auto-adjusting. Just like the challenge level of the entire game is. You remember this post?
If you want to optimize your financial gain, you don't take a too large group with you. But going really deep with just your buddy is .. hardcore. On the other hand, if you just want to see the content and don't care all that much about optimizing the financial gain, you go down there in a large group. Which makes dying improbable or even impossible. .. If you don't go too deep that is. But with a casual mindset you don't want to spend too much time on the game anyway, and consequently will never make it very deep for time-reasons.
The death penalty is a clear cut. No aftermath. You are not weaker for some time, you don't have to regain (re-grind) stats or money. In fact, nothing in the game reminds you about your death. Once you are back on the surface you are free to experience new adventures. In the labyrinth - or outside of the castle.
The game makes it easy to get some basic equipment, of course.
The death penalty, in this game, exploits mental accounting to make people afraid to lose potential future gains. But since it's just potential future gains, they aren't that painful to actually lose.
The death penalty is auto-adjusting: the more hardcore a player is, and the more risk he is willing to take, the harsher it becomes.
The death penalty is a clear cut. Nothing in the game reminds the player about a past death.
The death penalty is impossible to abuse, unless the player wants to get back to the surface and lose all his stuff.
Finally, assuming the lore supports the naked-teleport, it makes a lot of sense from a simulation point of view.
Is it perfect? No.
But even if you don't like this specific death penalty, I hope I could spark your imagination. Maybe you can come up with more cognitive biases to exploit to create an even better death penalty.
For purely personal reasons I removed a blog from the "Blogs I follow".