Needy and Greedy
One thing that Blizzard has been able to bring to the world of MMOs is the experience with and knowledge of just how nasty players can be to each other. They’ve put a lot of thought, and design, into how to mitigate against griefers and plain old jerks. A really good example of this is the loot system, which is not only extensive and flexible, it encourages and promotes interesting player mediated loot protocols that can be described in the Australian vernacular as A Fair Go.
Now that they have provided a facility for whoever received loot in an instance  or raid to send it on to another participant in the instance or raid, there is little chance of a well-meaning player accidentally getting stuff they can’t use, and there is almost no way for a greedy or malicious player unfairly gaining loot. (As an aside, the WoWWiki article linked above lists only one way to ninja items. Another way is for the instance or raid leader to set themselves to master looter, then not give out any of the looted items).
So in that space, what’s my own protocol for loot? Pretty simple really. For greens, I greed. Either Belmann will DE stuff, or my various alts will sell them – gold is always a Very Good Thing. The same generally goes for blues, but only in what I would think of as a low-level instance – 5 mans and low-level raids from Vanilla WoW and BC. Purples I only need if I need them, otherwise I pass. Why? Because I hope that everyone else will do the same. In my mind, this is the fairest way that I can approach loot. Like a variation on the prisoner’s dilemma, altruism and generosity might pay off in loot, but will almost certainly  pay off in reputation.
And that’s where the genius of Blizzard’s design of the loot system is revealed. Ultimately, the controlling factor is human mitigated. Jerks are generally punished, or ostracised, and team players (for whatever your definition of team is) are generally promoted.