Huh? It's not Sanguine's hat, is it? Deep-In-His-Cups just made a bet with you and Sanguine to retrieve some bandit leader's hat. With persuasion you can lower the price to 750 by the way.

I also believe he gives a different answer depending on how much money you'll eventually give him, 750 leading him to say he'll buy something for his headache, and 10,000 resulting in him buying some land in Black Marsh. Not sure anymore 'though. And he'll still randomly spawn too, no matter what option you take (yes, that includes killing him lol).