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I have been toying with an alignment house rule and would like some feedback on loopholes, abuses, and any other possible problems this change might create. Thank you.
Neutral Alignments
First off, neutral does not exist. Neutral is being excluded for two reasons. First, no one is truly neutral. A person always has tendencies, even if only slightly off the neutral mark, but with one more decision that person sways to another side. The possibility of a person swaying from one side to another in perfect harmony and time is virtually impossible. There is no need to define one out of a trillion people.
Secondly, the idea that a person can no longer abuse the system of alignment abilities/spells is intriguing. By forcing everyone to be either good or evil and lawful or chaotic, spells like Dictum will make a difference. Druids are no longer forced to be neutral.
As for monster alignments, they will not be adjusted. They represent a generalization of a group of creatures not a person. One system for two similar yet different ideas is not useful. When you come upon a NE alignment in the books, in general, 50% are CE and 50% are LE.
Ethics: Lawful and Chaotic
A lawful person follows a set of laws or a code. A code does not necessarily have to coincide with the laws of a society. But whatever is chosen must have specific rules that a person abides by. A chaotic person does what he feels is best at the time. He ignores laws or follows them for his moral compass.
Morals: Good and Evil
Good and evil is not so easy. These are abstract concepts defined by each individual person. It is impossible to give a concrete definition. We are going to simplify good and evil by defining them as society and self. If you choose to do something for another or for a group of others that is generally considered a good act. If you choose to do something for yourself without regard for others that is generally considered an evil act.
Additionally, we define alignment as x and y, not x y. So a person is lawful and good, not lawful good – although it will still be written as lawful good. There are no longer definitions for lawful good, chaotic good, lawful evil, chaotic evil, or any neutral.

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Are people really, and I mean really, choosing true neutral so much this is a problem for you? And is the fact that spells like dictum aren't a huge deal that much of a problem? IMO you're working on a solution without a problem.
My purpose is to create an alignment system that mechanically works for spells and abilities while lessening the role playing restraints in place. I specifically meant to keep alignments broad so they did not interfere so much with character personalities.
Alignment has been a problem since the days of Gary Gygax. For some people, alignment causes so many problems that they consider taking it out of the game entirely. I would like to keep it in my games.

blue_the_wolf |

no one will ever like 100% of your allignment house rule.
its ALWAYS just an argument waiting to happen.
with that in mind explain your system to your players and tell them that thats just the way it is. (although druids may have a problem)
Personally I tell my players this.
Your alignment on paper is the way the player things of him/her self.
The gods however (GM) may see you entirely differently.
for most classes this will not matter. a fighter rarely cares what his alignment is until they pick up a holy sword or some one does a detect evil. at that point the player may be surprised his neut/good guy is pinging as evil because while he personally thinks there is nothing wrong with slaughtering 40 orc women and children then later killing a boat captain who refused to allow him passage on a boat. the gods felt those acts were pretty evil.
If its a class that requires maintaining an alignment like a paladin, cleric or monk I will give the character dreams and portents which warn the character that various actions were tipping their alignment and they would have to re-evaluate their actions.
having said that.
as the GM the gods view alignment sort of along these lines.

Sunaj Janus |

Honestly, other than the occasional person that wants to be chaotic neutral to get away with anything, I don't find alignment that much of an issue.
Really most of my player's don't even know their alignment. Because there is no reason for them to, it's just another part of the game that I keep track of in the background. The only ones that care about alignment are paladins and others religious persons. And I don't want a player ever trying to justify an character action because of alignment. Players actions should be based on what their character WOULD do, not based on what a person of X alignment SHOULD do.
Character's and therefore player's don't need to know alignments, and shouldn't worry about them any more than you should worry if your actions change your alignment.