You kill monsters for loot, why would you not kill players for loot? It's a pretty simple concept. You win, you should be rewarded. If you lose, you should NOT be rewarded.

Nothing is worse than playing a PvP game where your only reward for winning is an increase to a counter that tracks how many kills and deaths you have. It's silly.

Having loss makes it more meaningful as well more scary. Nothing is better than shaking in your chair because you're about to have your heart ripped out of you and all your items potentially lost. If I have ZERO loss, then who cares. I win, I win, I lose, I win.