As a literary person, my goal when playing MUs is to read and write the best possible story. I want the kind of story that, when complete, could be enjoyably read about in a book, without anyone sighing with boredom or rolling their eyes. Such a story requires conflict, progression, stakes, and diverse, fallible, realistic characters. I won't say that such stories don't exist in MUs, but they're rare, fleeting, and require a lot of finesse to achieve.
One of the most easily identifiable barriers to good storytelling in MUs is something we can call, without any clinical implications, 'the Hero Complex' — or more simply, player egos. Players don't often view their characters as unimportant cogs in the storytelling machine, but as the hero; the victor. They want their characters to be smart, sexy, morally unambiguous, badass, powerful, competent and special, but when these traits are universal, they don't make for a good story; they make for a cast of competing divas on a stage too small to hold more than one.
They don't want conflict, because conflict with their character feels like a personal attack. They don't want stakes, because stakes implies a risk that they might lose. The don't want complexity or diversity, because they want their characters to be unambiguously pure, upstanding, and worthy of admiration. In the minds of many MU players, ideally all other characters should like and approve of their own, should desire their own, should never fight their own, and no obstacles that seem insurmountable should ever be in their path. Their characters should never lose anything or come to any lasting harm. But can you imagine what a boring story that would be? It can serve the goal of personal escapism, but very little else. As patronising as it sounds, I think many MU players don't actually know how to have fun, and actively avoid it without ever realising that their own inhibitions are responsible for their lack of fulfilment in the games they play and the stories they write. This would be totally fine if it were self-contained, but it rarely is: divas tend to lash out at anyone who threatens their escapist bubble of in-character peace and perfection, are riled up by environmental conflict, and make it their mission to stop any rising intrigue in its tracks by trying to 'solve' narrative obstacles prematurely or creating unprecedented backlash against any moral ambiguity.
So the question becomes, as a game creator, how do you tackle this? How do you encourage your playerbase to step back a little from their need to play heroes? From their need to avoid obstacles, reject risks/stakes, and inhibit progression or complexity in a story?
An idea I'm fine-tuning at the moment but would appreciate more feedback/discussion around is something called 'Heroic Sacrifice'. This idea wouldn't solve the Hero Complex, but it would exist to incentivise behaviour in the opposite direction. By capitalising on player needs to feel that their character/play-style is heroic, noble, important and special, the idea would be to reward players for 'sacrificing' some aspect of their character throughout their play. It could be the character's life; it could be an ability, such as sight or their leg. It could be a moral sacrifice, for example taking a life in order to gain wealth, or in the opposite direction, sacrificing the entirety of their character's wealth in order to save another character's life. The idea would be that throughout the story, opportunities arise for the characters (or sometimes the players OOCly) to make various sacrifices, for example a diabolical NPC might want to mutilate your character's face, rendering them ugly, but if you accept this consequence you'll earn some points to invest elsewhere — or in your next character.
I know that current systems do exist throughout the MU world that allow you to select preexisting conditions that make your character's life harder (a limp, a stutter etc.) in exchange for getting more points to spend elsewhere, but in this instance I'm talking about choices made on a near constant basis throughout the story. For example, letting someone kill your character, having your character fall down a treacherous mountain while the rest of the group struggles to climb and becomes increasingly nervous that they might be next, having your character lose their leg in an epic battle, or having your character betray their own. You, the player, would be rewarded for making unpopular choices, thus helping to balance out in-game demographics, raise in-game stakes, and so on. Ideally such a system would also socially reward you: as a player, you'd be thanked for helping to drive the story.
For the question of rewards, I'd like other posters to chip in.
What would incentivise you to let your character be killed or seriously harmed in some way, such as being blinded or losing a limb?
What would incentivise you to have your character make an immoral choice?
Under what circumstances would you not be mad at someone whose character just royally screwed yours over?