There is a detailed description of the mechanism used in Yahoo! Answers in chapter 10 of the book. You can read the draft text here: http://buildingreputation.com/doku.php?id=chapter_10

BTW, everyone keeps assuming that reputation is all about karma. It's not. We cover that in chapter 1 (and over and over again in the rest...)

Cheers,

Randy Farmer, co-author Building Web Reputation Systems