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Within a wilderness adventure area, there are fixed locations where rare encounters have a chance to spawn. These are usually mini-bosses that replace a normal spawn of monster, but might require talking to a non-hostile npc. Killing the mini-boss or completing the goal the npc has completes a quest, which grants some experience and a chest. Killing the same rare encounter over again grants 33% of the normal experience, and the same chest, which you can eventually ransack. Completing all of the Rare encounters in a area will grant a larger one-time experience award.
Within a quest this refers to a named monster that does not always spawn. Usually killing these will provide some optional experience, and/or an additional chest, though not always. Unlike wilderness areas, they don't count as their own quest, and won't contiously grant the same repeat experience bonus, but rather continue to grant a percentage of the base XP, at the usual reduced rates depending on your number of completions.
 See Also
Category:Rare encounter - List of all rare encounter. Also includes rare spawns in quests.