How does epgp work in World of Warcraft raiding

EPGP (Effort Points, Gear Points) is a loot distribution system used in raids. In this system, people who attend raids, supply raiding resources and the like are awarded EP (Effort Points) by the Raid Leader.

When raiding, if a player wants loot, he states his intention to the Raid Leader, usually using an EPGP addon specifically for this, since it makes administration easier. Whoever has the highest EP/GP ratio wins the item, and the item's value is added to the character's GP (Gear Points).

This drops the character's ratio, meaning that next time he'll have less chance to win an item if others want it as well.

To prevent the hoarding of EP and being burdened by years of GP, usually a system of decay is also in play, like everyone losing 10% of both EP and GP every week.

Usually EP are handed out once per hour (attendance) for first-time boss kills and when handing in flasks/enchanting mats/etc.

Example

Bob and Allen both have 50 EP (from previous raids). Bob has 10 GP and Allen has 20 GP (gear acquired previously). Their ratios are 50/10 (=5) for Bob and 50/20 (=2.5) for Allen.

An item drops and both want it. Bob gets the item, because his ratio (5) is higher than Allen's (2.5). The item is worth 15 GP, added to Bob's GP score. He now has a ratio of 50/25 (2).

A second item drops, and again both want the item. This time however, Allen's ratio (2.5) is higher than Bob's (2) and so Allen wins the item, and 15 GP is added to his total, putting him at 50/35.

At the end of the raid, Bob and Allen receive 10 EP for their attendance. This puts Bob at 60/25 and Allen at 60/35. At the end of the week, all numbers are reduced by 10%, so Bob is at 54/22,5 and Allen at 54/31,5.

The system may seem awkward at first, but it is in general very fair and balanced. It does require a good addon to track the numbers and make bids, as usually there are optional rules like lessened costs for offspec, or some Need/Greed system included.