I usually play on normal difficulty unless that's just too easy, like in Dragon Age 2. If it's a game where I actually enjoy the combat a lot, then I'll also try harder levels, but for most games I don't like being stuck at any one place for a long amount of time. I like upping the difficulty if it's a game I play through again, though, and I like +games that do that automatically, such as Torchlight 2 and Borderlands 2.
However, I don't like bosses or encounters that feel 'cheap'. If they feel unfair then I have zero compunction about using cheap tactics, myself.
To be honest, I don't really like bosses very much. They're almost always gimmicky somehow. I much prefer a very hard fight with tough standard enemies, or having to fight my way though a ton of strong opponents. Bosses are always like you're just trying to figure out the weak point and then it's usually just repetition.
One thing I do that almost always makes it harder, however, is that I horde potions/items and money. I generally finish games with tons of each. I see other people going through them like candy while I have stacks of 99 in storage.
I also LOVE taking on monsters outside my level range, even if it means being really cheap and/or resourceful. In Fallout: New Vegas, for example, I love hunting Deathclaws early by setting up mines and sniping from long distances. Dying multiple times is worth the thrill. I died sooo many times when I found the legendary Deathclaw but kept setting up mine clusters and trying over and over until I pulled it off.
I guess it really just depends on the game and how much fun I have playing it. The more linear it is, the more I just want to power through. Open world, though, I like it challenging.
