Well the karma I read about in books. (I don't know if its a good reference, but its something like: what goes around comes around)
But I'm not sure if it could be used that way. Because this way you can not play an evil character without getting punished, and instead of getting a game we would just get lessons in moral/ethics.
And actually the more I think about it, a karma system would be too biased towards a certain playstyle and thus rob us of our freedom.
So maybe, as I read before, a good reputation system would be better.
Every NPC's thought about you should be different, so its not that you have a reputation of 80 in a town and therefor all the inhabitants like you.
For example when you help a certain person, his neighbours might be jealous and like you less, unless you do them a favor too.
And when you first meet people, their thought about you should depend on their race, your race, their general thought or experiences with strangers, and how good or bad of a day they are having.
When you get more famous, for example for being the arena champion, some people might like you for it, others might fear you for it, and others might think that famous people aren't very nice and thus "hate" you for being famous.
