Last Epoch does have an experience (EXP) penalty mechanic, but it is quite specific and not punitive in the traditional sense seen in some other ARPGs. The penalty applies when a player fights enemies or completes content that is significantly above their character's level.

Specifically, if you are more than 10 levels below the area or enemy level, the game caps the experience you gain as if the enemies were only 10 levels above you. For example, if your character is level 20 and you defeat level 40 enemies, you will receive experience as if those enemies were level 30. This mechanism prevents players from gaining excessive experience by farming very high-level content too early.

In group play, the experience penalty also takes into account the level disparity between party members. If you are not the highest-level player in the group, the penalty can kick in earlier based on how much lower your level is compared to the highest-level player. The experience you gain is adjusted accordingly, but it never becomes negative—meaning you still receive experience, just reduced relative to the level gap.

Importantly, there is no experience penalty related to player death in Last Epoch. When a character dies, they do not lose any earned experience points or gold. This is a significant quality-of-life feature compared to other ARPGs, where death can lead to experience loss. Players can thus experiment and take risks without fearing loss of progression due to death.

The rationale behind the EXP penalty for level disparity is to encourage players to engage with content appropriate to their level and to maintain game balance. It discourages farming very high-level zones prematurely and promotes a smoother, more balanced leveling experience. The penalty is more of a cap than a harsh reduction, ensuring that players still gain experience but at a controlled rate.

Overall, Last Epoch’s experience penalty mechanics are designed to maintain fair and balanced progression without punishing players harshly, especially on death.
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