Well, the synopsis is meant to be a "helpful hints" for people to have at their elbow while running a game, not a HW lite, so you can say that this was actually a feature, not a bug.
AP represent how close you are to accomplishing your goal in the context of an Extended Contest. They are *not* Hit Points, or anything close to that.
You start an extended contest with a number of AP equal to your ability rating (each "w" counts as 20 AP), plus any modifiers that come *before* the contest starts, plus AP loans from other people (like your village).
In an extended contest you bid your AP every other round - the first round the person who initiated the contest bids, the next round his opponent bids, then back to the first guy, etc. You can bid any amount of ap from 1 to your Starting AP total., or current AP total if you've got more than you started with. Once the bid is made, both participants roll the dice and check the Extended Contest chart to see what happens to the bid. It can range from "nothing" to a forfeit (one person loses AP) to a Transfer (one guy loses, one guy gains). Bids are meant to be an in-game method of showing how much effort you put into the contest - a low bid is cautious, a high bid is going for the kill.
Once one side (or both) goes to 0 AP or less, the contest is over, the winner is the one who still has AP left (yes, you can have two losers). You consult the Consequences chart to see what the long-term effects of your loss might be. If this is a physical contest where people could get hurt (like combat), then the wounds are physical wounds and affect your physical abilities. If there is no danger of wounds in the contest (like, say, a debate), then the penalty in the Consequence chart can be applied to whatever the Narrator thinks is "right" - it could mean your self-esteem, or your reputation, or a connection to your magic.
In Group Extended contests (ie, more than two guys involved in the contest), each perosn involved gets a chance to nominate an opponent and bid AP against him. This is where the multiple attacker penalties come from - if you are "attacked" more than once in a round, your chance of "defending" is lowered by 3.
Hope that helps.
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