Borderlands 2 Creative Director on Loot
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When you kill an enemy the game looks at a property in the enemy that defines the loot that it drops. What loot drops is determined by a two types of data. The first is called a List definition. A list definition is simply a collection of the second type of data; item pools. The List definition is a data structure invented to allow designers a more easy way to assign gear without needing to list the same 5-7 item pools over and over again for every enemy. Instead we could just point to the list definition. By adjusting the list definition we could change the loot drops for a huge number of enemies at one time making it a significant time saver.
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When our bandit is killed the game makes a random die roll for each of the item pool definitions in this list to determine if it will drop something from that pool. For example, the DropODDS for Pool_GunsAndGear evaluates to 0.085 in a single player game. When you kill an enemy the game picks a random number between 0 and 1. If the number chosen is less than 0.085 the game will drop an item from the Pool_GunsAndGear item pool. If the number chosen is greater than 0.085 it will not drop an item from that pool. (0.085 works out to about 1 in every 11.76 enemies will drop a gun or gear.)
The game then does the same die roll for each item pool in the list definition using its probability odds to determine which ones will drop.
And from the second:
In a game with millions of pieces of gear it is a shame for people use the same weapon for a thirty level period. My mission became to try and get players to use a weapon for a much shorter period than in Borderlands so that players would explore the massive breadth of weapons and gear that the game provides instead of using Sledge's Shotgun for the entire game.
Strangely, the solution came from looking at the economy in Borderlands which used a compounding interest model so that you started out buying things for 10 dollars but by the end of the game you were buying items for millions of dollars. The curve of the economy grew dramatically with each level you gained.
I took this model and applied it to the damage of weapons and health of the enemies. What this method provided was a significant difference in the damage stat of a weapon that was a level higher than the one you were using. When your weapon becomes about 4 levels old the damage number on the new weapons dropping is so much larger that you will generally upgrade because the old weapon just can't hit hard enough to keep up with the health of the higher level enemies.