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Fable III. The item was released for free download on Xbox LIVE Marketplace on Friday 17th December, 2010. It is similar in appearance to the Men's Pyjama Nightcap but has a tassel and more "festive" colouring.
Bring cheer to the people of Albion with this extravagant hat. Whether you want to give them any gifts as well is entirely up to you.
- — Description from Xbox LIVE Marketplace