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This question was raised at the latest session of my D&D group. I just changed my PC, so I got the xp penalty the Dungeon Master's Guide suggests (a little less than that, to be precise). To clarify things: I talked to the DM about the fact that -- as stated under the rule about the penalty in page 42 of the DMG -- a character of lower level in a group of equal-level characters gets more experience if they all defeat a CR appropriate monster… a rule made to narrow or close the experience gap.

Then, the drow of the group suggested that, if that were true, he should be gaining more experience as well. The sidebar on page 42 does not clarify if it is based on Effective Character Level; it says level 9 characters in its example.

What is the case? Does the rule exist, and is it based on ECL, on Class level, or an option I do not cover here?

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The rule is almost certainly based on ECL, just as how Challenge Rating is based on ECL. Even if not explicitly stated, it's apples-to-apples common sense to assume such. There's no reason a level 14-powered Drow needs to get treated as a level 13 character.

The Drow's player should also consider this, if they really feel slighted: http://www.d20srd.org/srd/variant/races/reducingLevelAdjustments.htm

It's not an official rule, but your GM would probably be willing to run with it.

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It's ECL. That sidebar is just an explanation of why it works; how it works is actually back on page 37, where it says "To determine the XP award for an encounter, follow these steps."

And then step 1 specifically calls out ECL: "1. Determine each character’s level. Don’t forget to account for ECL (see Monsters as Races, page 172) if any of the characters are of a powerful race."

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