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I agree that the game is a bit difficult in its current form.  Because it was made for a jam, we did not have too much time for balance testing unfortunately!  Originally you were going to have to choose between regaining oil or sanity in between levels with no pickups to be found on the floors.  Thankfully we decided against that!

Throwing the lamp was meant to be a high risk and high reward as its the only way to kill multiple enemies in one action.  Getting blocked by enemies is definitely a frustrating way to die.  The pathfinding was a bit of a rush job since our programmer had to write an A* algorithm from scratch which ended up being more trouble than we anticipated.

Thank you for playing and giving your feedback!

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I think the issue with the pathfinding is that once you are adjacent to an enemy, it tracks you move for move. There is no way to get past it, and if it happens to be standing on your lantern, then you can neither recover the lantern, nor attack it. All you can do is move back and forth while it continues to block you.

Is the lamp supposed to have an AOE effect? I've not seen it kill anything other than the target square it lands on.

I can definitely see the light/sanity trade off, but the balance isn't quite right yet. You can't skip lighting torches, because loss of sanity just kills you outright, so you just have to live with the lack of oil.

I assume the blue ghost isn't supposed to be destroyable?

The lamp kills all enemies and lights all torches on its path after you throw it.  Originally the plan was to have an AOE tied to it but this went along with some other ideas we had to cut and didn't end up making it into the final product.

You gain more sanity than you lose oil when you light a torch.  I think the main issue is how fast you lose oil as you play.  When you hit zero sanity the blue ghost appears and begins pursuing you.  Its not a definite death sentence but you are forced to play much faster than you'd like to.

The blue ghost isn't killable but you can push him away with a lantern throw though you probably aren't getting it back at that point.