The first rule of DM fudging is, you do not talk about DM fudging. 
To me, fudging is a tool to compensate for flaws in the ruleset. I tend to run things loose and on the fly, and as such I have often found myself at the mercy of badly written rules and badly balanced statblocks. This results in a challenge that I had intended to be "tough but beatable" turning into either a TPK or a cakewalk. When that happens, I'm apt to fudge to bring the encounter more in line with what I'd intended. One of the things I love about 4E is that the balance is much tighter, so I very seldom have to do that any more.
My philosophy is that this type of fudging is merely correcting for the faults of the system. I'm making the encounter into what it was always supposed to be, and would have been if the rules hadn't been written by crazed troll monkeys*. I've come to believe that fudging to bring about a specific outcome (e.g., party wins the fight, none of the PCs dies) is a bad idea. No matter how skillfully it's done, the players will eventually figure out what's going on, and then the thrill is lost.
And, like others, I generally avoid fudging the dice these days. There are other, subtler tools available--adjusting monster hit points on the fly, for instance, or changing the effect of a power that hasn't been used yet.
[SIZE=-2]*Actually, writing an RPG ruleset that is balanced and playable and fun is extremely hard. I know, I've tried. However, I feel safe in saying that anyone who goes into the RPG design business is at least 60% crazed troll monkey anyway. You have to be to want to take on that kind of challenge for that kind of reward.[/SIZE]

To me, fudging is a tool to compensate for flaws in the ruleset. I tend to run things loose and on the fly, and as such I have often found myself at the mercy of badly written rules and badly balanced statblocks. This results in a challenge that I had intended to be "tough but beatable" turning into either a TPK or a cakewalk. When that happens, I'm apt to fudge to bring the encounter more in line with what I'd intended. One of the things I love about 4E is that the balance is much tighter, so I very seldom have to do that any more.
My philosophy is that this type of fudging is merely correcting for the faults of the system. I'm making the encounter into what it was always supposed to be, and would have been if the rules hadn't been written by crazed troll monkeys*. I've come to believe that fudging to bring about a specific outcome (e.g., party wins the fight, none of the PCs dies) is a bad idea. No matter how skillfully it's done, the players will eventually figure out what's going on, and then the thrill is lost.
And, like others, I generally avoid fudging the dice these days. There are other, subtler tools available--adjusting monster hit points on the fly, for instance, or changing the effect of a power that hasn't been used yet.
[SIZE=-2]*Actually, writing an RPG ruleset that is balanced and playable and fun is extremely hard. I know, I've tried. However, I feel safe in saying that anyone who goes into the RPG design business is at least 60% crazed troll monkey anyway. You have to be to want to take on that kind of challenge for that kind of reward.[/SIZE]
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