My preferred method at present is goal orientated awards, which are largely defined by the players and supplemented by story awards that feed in to the ongoing meta-story or setting features.

The upside is that combat is no longer a necessity but a choice, and allows tactical considerations and character motivations to come to the fore. Sometimes the pc's are better served by delaying fights until circumstnaces favour them, or even running away if it would better serve their goals.

The downside is that player orientated goals can pull the group in multiple directions, as one character seeks to attend to his budding mercantile empire whilst another wants to dash off and find the Hammer of Spankalot to avenge his dead dog.

They key is being able to balance these aspects in such a way that doesn't feel contrived. It requires a certain amount of player collusion, at least in the early stages, but has the benefit of reinforcing group cohesion.

Quote from: AlnagActually, I don't bother with XPs much. I just tell the group to level up... (pretty often btw.)

That's the True20 method, and one that I wholeheartedly endorse. Instead of offering awards piecemeal I define certain waypoints on the goal completion trail as being worthy of levelling up.

Well,.. I'm kinda against "just telling the group to level up". I want the players to be in control of their destiny. In a true sandbox style game they even pick their own challenges, pretty much.

And it's also important to note that even though the XP I give out is uniform, it isn't standardized. It isn't a situation where "no matter what you do, I'm only giving out 650 XP for the first three sessions" or whatever. What I'm saying is- whatever XP they get is going to be equally divided. If it were standardized, you run into a whole incentive issue, and nobody has to put forth any extra effort. Because no matter what they do, theyre getting the same. THAT is vile communism  in action.

 The way it really works out is-- the players figure out where they are going, and what they are doing. There are little adventure hooks: "Hey guys, do we want to go rescue the princess, explore that dungeon we ran across last game, or gather dragon bones on the plane of desolation?"

And then they figure out what challenges they (think they) are up to and go from there. At the end of the session, I tally up the challenge and encounter XP as in any D&D game, add it up, divide by the number of players, and there it is, uniform XP.

I think the idea of experience as pacing rather than a reward is basically correct, especially for D&D 3e.  In games where levelling has been slow, tactics have converged quickly, and combat becomes repetitive and dull.  Also, slow levelling makes loot take on a much more important role in character differentiation.  It is also somewhat demoralizing to have a hard time facing the same old foes, whereas it is exhilirating to easily defeat types of foes that were earlier life-threatening.  Rate of experience also affects the balance between various classes, because a wizard can accumulate new spells without levelling, unlike a sorceror.
Conversely, two quick levelling gives players too much complexity to really handle, and they never learn to optimally use their abilities at any level.  So the right amount of xp is an important nob the DM has to tune the game.  

Using xp as a reward for ``good playing'' tends to create a feedback loop that I don't like.  Characters that are not optimized, or have fallen behind, or aren't useful in the situation that they find themselves in (rangers in a crypt or rogues vs. undead) get further behind if you use ``contribution to the group effort'' as a standard.  So those that are less mechanically effective get relatively less mechanically effective, and even worse, stagnate, so they can't fix mistakes or adapt to the campaign.  If you reward ``good roleplay'', then the good roleplayers get jazzed (but they were usually into things already) whereas the sleepyheads aren't given a reason to get excited about the game again.  

I like the 3.5 system, where characters of lower level get more xp for the adventure.  That creates a feedback loop in the other direction, where players that missed out before get caught up.    I prefer  using xp to group levelling every k adventures, because there are other uses for xp than levelling, players don't show for every session, and the xp rule allows those who fell behind to catch up.  Also, I prefer staggered leveling, where pretty much every session, one of the characters has levelled, to group levelling, where every five sessions, the whole group levels.  Staggered levelling means a small change in tactics every session, rather than a huge change every five sessions.