How to award XP for this encounter?

[Jon_Dahl]

The PCs heard about a "dragonman" leading a group of bandits who had an important hostage. The PCs easily beat the bandits who ran away, and then they faced the "dragonman" who was in fact a phasm who had come to the "lands of men" to have some fun. They blasted it with spells and did very little damage. This irritated the phasm, especially since the battle conditions weren't in its favor. It offered to stop fighting and tell everything about its life plus release the hostage. The PCs paid it pretty well, something like 650 gp, and the phasm let them have the hostage (gear included), it told its "glorious lifestory", and then it left back to Underdark. Its holidays on the surface were over. The PCs brought the hostage safely back home.

The bandits were worthless and not worth any XP, but the phasm is worth decent XP as it is a CR7 monster. What do you think?

[Hunter Noventa]

In general, the rule for awarding xp is 'Overcoming an encounter'

Bribery is certainly a valid method of overcoming an encounter you otherwise couldn't. You don't necessarily have to defeat/kill everything to win an encounter.

I say award full xp. In fact perhaps a little extra for not being sociopathic murderhobos and fighting the thing anyway, after it had offered to surrender. The only encounters that don't award xp are the ones that don't happen, after all.

[Nibbens]

In general, the rule for awarding xp is 'Overcoming an encounter'

Bribery is certainly a valid method of overcoming an encounter you otherwise couldn't. You don't necessarily have to defeat/kill everything to win an encounter.

I say award full xp. In fact perhaps a little extra for not being sociopathic murderhobos and fighting the thing anyway, after it had offered to surrender. The only encounters that don't award xp are the ones that don't happen, after all.

While I agree with this above statement, a few things need to be taken into consideration:

1) Did you expect the PCs to fight the thing and win? If you did and they "overcame that challenge" through bribing it, then absolutely, full XP.

2) However (and the second school of thought here), If you had planned the encounter to not be fought, and instead had a difficulty in mind for what the PCs had to do in order to best the situation - then you give them Xp according to the CR or difficulty of the challenge you set for them.

For example: I throw a tarrasque at my level 6PCs. However, I never plan for my PCs to fight it, the challenge I set up if the difficulty of running and hiding through a forrest while the big T comes crashing after them. At this point, my CR is not thirty-gajillion of the big T, but instead whatever CR and difficulty I was going to make the Run-and-hide-fest.

Now, some could argue that the difficulty of the run-and-hide-fest is directly proportional to the CR of the thing chasing them - however, as the DM you have the call of how difficult you want that to be. Maybe the big T only gives them a token chase, maybe it's stupid, or maybe it remembers the larger slow-moving cattle it saw 20 seconds earlier before it gave chase to the faster and more annoying to catch prey. These situational modifiers - if planned from the start - should take precedence over the CR of the Big T. The Big T in this situation is irrelevant - it could have been anything. Giant Lice, Mushrooms, a god booming in the sky threatening to destroy a village. You give XP according to the Challenge you prepared for them.

Edit: and yes, as a side note: If your level 6 PCs actually manage to kill the Big T (Looking at you Madness) instead of the challenge you set up for it, the absolutely, award the XP. They earned that! lol.

So, it's exceptionally important for you to ask yourself: 1) What was the real challenge here? and 2) How difficult did I predetermine that challenge to be?

[Red Fel]

I say award full xp.

This. As Hunter Noventa says, xp is awarded for the encounter, not for the kill. They came up with a way to beat the encounter; that gives them the reward.

Look, a trap in a dungeon counts as an encounter. There is an xp reward for getting past it. Do the PCs have to disarm it to get the reward? No. They still get the reward if they trip it. All they have to do is survive and get past it.

Same here. They ran into the monster. Encounter! What was the goal of the encounter? Stop the bad guy, rescue the hostage! Did they succeed? Yes! Does it matter how?