Because he couldn't have just taped a check to the bill of the hat and tossed it onto the next young good looking guy he passed and let Dave enjoy the remainder of his life with some memory loss and a small stipend from his bank account at any time. No, he had to set it up so it's his own kid.
Eh, he'll get his eventually. His hat just became an heirloom. Sooner or later someone's gonna put it on the mantle instead of on their head and he'll get to spend eternity trapped in his own mind... with no game overs.
Next game will be he has no hat and the main quest will be to find it to defeat evil... wait when did the hat become the master sword?
well if they made raid loot like it would really happen you'd have people raiding bosses intentionally getting wiped to replicate their powerful items.