http://buildingreputation.com/writings/2010/02/on_karma.html

TL;DR summary:

1. Robust karma - quality of contribution and quantity of contribution is key.

2. Simple and complex reputations. Simple are evaluation made directly by users, easy to understand. Complex are multiple evaluations based on a variety of factors such as search engine results.

3. Don't display karma frequently but also make sure that karma are narrow and contextual as possible.

4. Avoid negative karma lest you get "karma bankruptcy" in which a user start a new account.