Most people would of course prefer the magical arrow, assuming that it would bring some benefit such as greater accuracy or more severe wounds. This is based on a long tradition of fantasy literature with magical swords and such granting advantages to their owners.
However, in Dungeons & Dragons 4th edition it appears that the designers decided that the risk of players gaining advantage from ammunition was just too great and they ruled that if a magical arrow is fired from a magical bow, then the properties of both can not apply.
This leads to the perverse situation that a character may lose a significant part of their ability to deal damage by using better arrows!
Using a paragon-level ranger as an example, consider the case of using the Twin Strike power ten times with a +3 bow and mundane arrows against a target where the ranger has 75% chance to hit. Each Twin Strike involves firing two arrows, so a total of 20 arrows are used and 15 are expected to hit. Each hit does an average of 12 damage, for a total of 180 damage.
Now switch to +1 arrows with some added property that makes them desirable to use. In order to enable that property, the ranger must calculate the attacks using the +1 bonus of the arrows and can not use the +3 bonus of the bow. This drops the hit chance to 65% and the average damage to 10 points, resulting in only 13 hits and 130 damage.
Thus the magical arrows do only 72% of the damage that the mundane arrows would do. It also understates the damage lost somewhat as using the properties of the arrow also involves giving up the effect on critical hit that most weapons have. This is counter-intuitive, using better (and highly expensive) ammunition should never result in a worse outcome.
I'll look at how this probably came to be and how it could have been done after the break.
The poor design was probably the outcome of a design committee meeting where somebody argued that stacking benefits would give ranged attacks an advantage over melee attacks (which do not use ammunition). There will have been a number of different options available for consideration.
- Additive bonus. Using a +1 arrow with a +3 bow results in a +4 modifier. This would give ranged combatants an advantage over melee counterparts, although it could have been countered by high ammunition cost (which melee fighters never need to worry about). It would also have unlocked higher bonus potential at lower levels, unbalancing the game. I do not consider this a good solution.
- Average bonus. Using a +1 arrow with a +3 bow results in a +2 modifier, with a rule to round down. If mundane ammunition is then treated as +0, then a +3 bow becomes +1 (1.5 rounded down) when used with such ammunition. While having the advantage of making magical ammunition better than mundane ammunition, this would greatly weaken ranged combatants. Again, not a good design.
- No cumulative enhancement bonus. This is the current design, which renders magical arrows largely useless. It adds complexity as mixing ammunition types requires recalculating to hit and damage modifiers for each strike. Unlocking any special property of the arrow involves giving up a large part your damage output and critical hit effects. It also fails to address cheese such as using cheap +1 arrows (saving up to 125,000 gp per shot) for imposing conditions in cases when you are certain to hit anyway.
- Use the highest bonus only. When using +1 ammunition with a +3 bow, treat the attack as +3. Apply other properties of both the bow (such as critical hit effects) and arrow (such as conditions), thus justifying the cost of the magical ammunition. This has the benefit of simplicity and intuitiveness, with ammunition becoming a value-add proposition balanced by cost.
The last option is my clear preference. It adds benefits from using ammunition of all levels over mundane ammunition. A +1 Firestorm arrow might add 1d6 fire damage, while a +5 arrow (vastly more expensive) would add 5d6 fire damage. This lets the combatant adjust to the difficulty of the combat, spending more expensive ammunition only when the challenge of the fight justifies it.
This approach breaks down when the effect is something like a Slow condition which doesn't scale with enhancement modifiers. To prevent combatants using cheap +1 arrows to save money this can be countered with immunities, where +1 ammunition only slows targets of level 5 and lower, +2 affects levels 1 through 10 and so on until +6 ammunition which affects all targets without limit.