A good question asked at Norwescon was whether or not a GM has a “social contract” with their players to do or refrain from doing certain things. Specifically this person was talking about killing off a PC in a trivial way (such as with an “unnamed” NPC or in expository narration) or removing earned experience from a PC. The question seems deceptively easy to answer, but I had to give it some serious thought before deciding how I feel on it.
Some GMs would say that this idea is pure hogwash. If a fighter, born the seventh son of a seventh son, destined for greatness, uncrowned king of these lands, is taken down by a kobold with a lucky critical hit, thems the breaks. That’s what the dice say happened, so that’s what happened.
Sounds like a fun game, huh? Good thing I’m not one of these morons.
To this mindset I must say, you really need to reexamine what you’re doing. We’re role-playing, not roll-playing. The story, and therefore the characters in that story, are far more important than the dice. Would you want to read a new Sherlock Holmes story in which Holmes has a brilliant insight into a murder he reads about in the paper, dashes off to Scotland Yard to explain to them what really happened, but gets killed in an alley halfway there by a mugger for his shoes?
Of course not. That’s not a good story. No one wants to read or play in something like that. Sure, Holmes was something less than physically intimidating in the Holmes books and so getting killed by a brute seems realistic, but who role-plays to experience something realistic? Do you really think that “Bank Manager the RPG” has a future? We role-play for the adventure because in the game we’re unrealistically prone to success, as opposed to the real world where we can fail at our leisure.
Some realism is required to make the success feel like a success. A story in which Holmes tosses a shilling out the window, kills a bird which falls to the street, causing a handsome to overturn, killing the real murder who’d originally gotten away would also be less than fun to play in because the challenge doesn’t feel real. So there needs to be just enough realism to make the environment seem like reality, but no more than that. So if someone is going to kill Holmes, it should be Moriarty, even if it would be more realistic for the period if Holmes died of cholera. Know what I mean?
On the other hand, if the player of the PC is warned that action X is suicide and does it anyway, it is also not your responsibility to keep them alive simply because that death doesn’t fit your story. I try to ask at least once during character generation for any game of mine if any PC can’t solidly answer the “why the hell are you here?” question. If they can’t, they get junked and a new PC is made. By that I mean, no suicidal PCs (congratulations! your PC gets their wish! they’re dead! back to c-gen), no cowards (fine, your character gets terrified and runs… right out of the story), and the hater changes (you are an elf racist? in a game where “elf” is a PC race? no. sorry you don’t get to dictate what the other Players can and can’t play in my game, d-bag).
Part of that entails that if your PC is the type of person who makes stupid choices even after the consequences have been explained (the suicidal one) then it’s your funeral, so to speak. So the social contract goes both ways. It is up to the Players to make PCs that would actually be involved in the game (and want to survive), but otherwise, yes, I believe if a PC dies, their death should have some kind of meaning. So what’s the point of all these kobold encounters you’ve lined up, you ask? There isn’t any, I say. Right there is the part that should be taken care of in expository narration.
Now removing experience is a touchy subject. Personally, I’ve never liked systems in which you spend experience on anything that can be lost. The fighter gets smarter because spends his experience on learning to swing his sword better and the wizard gets dumber because he chose to make a wand? WTF? Who came up with that idea? Or how about this one? The fighter holds off the undead for long enough that the rest of the party can kill it and at the end everyone gets experience. Unfortunately the fighter, because he made the sacrifice of being right next to the undead, got level-drained and comes away with a net loss. That’ll teach him to be brave.
Stupid. So far I have yet to see a system in which removing otherwise permanent advancement from the PCs in anyway results in a better experience. As a GM I don’t mess around with this mechanic at all and I go out of my way to remove it from any game I run, but I don’t do it because of any kind of social contract. I do it because this mechanic only makes games less enjoyable and I don’t see the point in including a mechanic like that. What? Every time I go to jail, not only do I not collect $200 in play money, but I have to jam my finger down on this real thumb tack till I bleed? Special “realism” edition with real “jail pain”, huh? Well… I’m not doing that. Screw your silly game. Anyone up for Scrabble?
The Gamemaster's Manifesto 
I generally agree. I recently lost a character in a D&D game. However, he did have a wisdom of 5, and he charged in to save a child when he probably should have hung back. So, I was fine with his death, since a wisdom of 5 really should be a deadly flaw at some point.I think a lot of gamers use the term "realism" when they really mean "verisimilitude." They want a coherent framework where the rules don’t change, but they don’t really want the rules to simulate real life.