With luck, it decreases the chance of finding common items while increasing the chance of rare-er items. It takes a bit to get to a point where you can both be extremely lucky and still ahve enough space in your bag for other items.
The lucky dagger + angler fish + 2-4 luck rings seems to give you a relative chance of 75% rare and up. :)
And yes, It stacks.
Ok thank you that makes sense I have never seen the floor 1000 boss and saw the infinite gold whestone+ assasin's dagger combo and have wanted to try that so I could see the boss but every time I've tried I can't get just 1 of the items. Also the game thinks I only want Doru so if I ever have 2 luck rings i'll see around 5 Doru.