Pretty good blog post came across my desk related to this today:
This is one of my few pieces of tried & true GM advice, developed during my but very useful for the OSR games I'm running now. I'm sure I'm not the first pe...
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"Kayfabe" is a good term, though I'd probably have called it "DM kayfabe" instead of "notebook kayfabe", as the idea is not to create the illusion that your notebook has all the answers, but rather the DM who does.
As I read the article, there is a difference between the wrestling example, where the audience is in on it, and what appears to be his DMing example, where it sounds like the DM is actually deceiving the players.
My view on this is that DM fiat, reasonably applied, is the whole reason you have a DM, or "referee" per the 1e DMG. But if you want to be able to apply fiat, you need the trust of your players. Keeping the trust of the players means not deceiving them.
4e is it's own beast in this regard, I think, because of all editions it probably gets the most benefit from pre-planned encounters (considering it uses role-based encounters rather than CR; as in you need Controllers and Minions and whatever other roles to play a part). Sure, Random Encounters can sustain that type of structure, but I think it's probably easier on the DM not to leave it to chance.
The thing is, as I said above, the system doesn't actually break if you don't use the WotC approved mix of monster roles, or if you deviate from encounter building guidelines. Yes, I have tools that are reasonably accurate in defining combat encounter difficulty, but as with early editions, I can deviate from that as long as I am giving players enough information and freedom to make reasonable decisions and vary their approaches accordingly.
There is a complaint in 4e that combat takes too long to add more by having random encounters. This is also not as true as you might think, because it is the nature of random encounters, properly built, to have fewer monsters than what you are putting in lairs; and to have those encounters in a simplified location i.e. tunnels, which don't have all of the different terrain elements to complicate the combat. Also, using a reaction system, random encounters don't always have to be combat encounters. And random encounters don't have much of an impact on expectations regarding XPs and treasure, if random encounters provide few XPs and little or no treasure.
And the treasure and magic items reward system is
also a lot more flexible than is generally supposed. You can give out +1 swords like candy, because at the end of the day, the bonus to weapon attacks is still only +1. And since the cost of weapons scales geometrically, you have to give out a
lot of cash and cash-equivalent treasure for PCs to purchase or make items that are not level appropriate.
Really, the biggest threat to "game balance" is character optimization, and even that really isn't a problem if you don't have different levels of optimization in the same party. If
everybody is optimized, they can just choose to go to more dangerous places, and get better loot.