Examples: Kobolds have Hostility 8 and Morale 6. Hobgoblins have Hostility 9 and Morale 8. Dwarves found in the dungeon may have Hostility 5 and Morale 8. A hungry wolf may have Hostility 7 and Morale 9. A hill giant will likely have Hostility 8 and Morale 6 (he is big, yes, but he is a coward when dealing with things his own size).
The DM can simply roll 2d6 twice on an initial encounter, where a result equal to or lower than Hostility indicates a hostile reaction, and a result equal to or lower than Morale indicates self-assertion (attack or bargaining) rather than retreat. Or the more complicated table and procedure below can be used.
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Attack: Monsters advance and attack the party
Stand: Monsters hold ground, fight if attacked
Retreat: Monsters make orderly withdrawal
Flee: Monsters run away headlong
In quotes: “Result only if party and monsters can communicate”
“Offer Service”: Monsters offer to help the party or fight with them a short while
“Offer Peace”: Monsters offer a longer-term truce
“Offer Alliance”: Monsters propose an alliance to achieve a mutual goal
“Ask for Service”: Monsters demand the party assist them, will turn neutral if refused
“Ask for Peace”: Monsters demand a truce and will impose other conditions
“Beg”: Monsters grovel and will offer all they have to escape attack
“Bargain”: Monsters parley, but will pay a high price to escape attack
“Parley”: Monsters negotiate a mutually acceptable truce
“Intimidate”: Monsters negotiate but will expect payment or other advantage
“Command”: Monsters demand a payment, bribe, or other service in exchange for truce
In square brackets: [Result only if monsters are cornered or outrun]
Surrender: Monsters throw down arms and beg for mercy
Berserk: Monsters fight without mercy in a last-ditch stand
Fight: Monsters fight, subject to morale checks
In angle brackets: Result only if party flees or retreats
Stay: Monsters do not chase
Pursue: Monsters give chase
No Quarter: Monsters will not accept party surrender, fighting to the death
Monster Hostility Roll (2d6):
-3 to roll if poorly disposed (evil monsters on raid, party invades monsters’ home or attacks them by surprise);
+0 normally (monsters on patrol);
+3 to roll if well disposed (allies meeting in a war)
Once established, a hostility result usually stands, unless the party does something to test or radically improve relations (offering a large bribe, demanding a large favour) which may force a re-roll. Situational bonuses can range up to +/-2: for example, offering food to a hungry animal might give a +2, while an encounter between uneasy allies such as dwarves and elves might give -1. Charisma bonuses to hostility rating only apply to beings of similar species (humans, demi-humans, and creatures with human-like motives) and compatible alignment.
Deception: Creatures of low intelligence or higher who can parley or otherwise represent themselves as friendly will attempt to deceive the party upon a Hostile or Mortal Foe result of 1 in 6 times; average intelligence, 2 in 6; higher intelligence, 3 in 6. Roll a separate d6 for this.
Monster Morale Roll (2d6):
-3 if monsters think they are outclassed by 2:1 (effective hit dice vs. levels) or more;
+3 if monsters think they outclass party by 2:1 or more
Once morale is established, a group rerolls morale when 1/3 or more of its members are incapacitated; again at 2/3; when a leader falls; and when the situation changes dramatically (such as reinforcements arriving). An individual who has lost 50% or more hit points must also check morale. The subjective odds might change as well, and this is reflected in the number of dice rolled at any point.
Situational bonuses can range up to +/-2: for example, a menacing attitude might give -1 to enemy morale (but -2 to reactions), while being outflanked from opposite sides might give -2. Charisma bonuses to morale only apply to beings of similar species (humans, demi-humans, and creatures with human-like motives) where the high Charisma figure is a leader of the others. Monsters may also have leaders who give morale bonuses but risk morale checks if they themselves fall.
Monsters of low intelligence figure subjective odds on pure numbers, also figuring in size and perhaps counting particularly well-armed individuals as double. Monsters of average intelligence have a more sophisticated idea of approximate levels and fighting capacity, while monsters of high intelligence are able to spot subtleties such as the existence of a magic-user.