Nalano said:
I don't have to see someone break into your home to recognize a suspicious character after you reported your home broken into.
Human beings are naturally receptive to recognizing patterns, and without the whole picture we are notorious for filling in the blanks ourselves.
The game mechanic of "karma" abstracts that to make up for a lackluster AI.
You may be technically correct that nobody saw you enter the house and you were smart enough not to sell the stolen goods in the same town, but people saw you enter the town, and people saw you leave the town, and during that time stuff was stolen: That's enough.
I have to agree with ramessesjones, Karma is not needed and I'd love it dropped. 1st off Karma isn't something visible. To suggest it is, is to suggset Fable's glowing tatoos and devil horns and such are a representative of reality. But many child predators look like the nicest person on the block. Murders, rapists, and arsonists don't look different from you or me.
Nalano, you are right that over time people can notice that when new guy showed up things started being stolen, but that certainly is not karma. That's intuition or deductive reasoning and it is totally different. If they want karma in the game, it should only affect karmaish things, like getting luck +1 or a +5% criticals, or anything chance like or envoronmentally controlled.
But a NPC should never be able to look at you (unless it's a village shaman) and suggest somehow that they can tell you have good/bad karma. The Charisma stat should do a lot more in dertermining that sort of reaction, then reputation, then if I've got a weapon out, then my companion, then etc.... with Karma never in the equation.