Here is my system. There are multiple classes of crime. Some are low enough to not make you be reported if you have good enough rep with the person you stole from, but it hurts rep with them. If you rep is already low or the person is a jerk you get reported. This means repeatedly steeling from your friend will make him like you less and eventually call the guards. Also if you are in there faction they will be ok. this is mainly petty thefts. You do NOT have the option to run for this level. Next is midlevel. it includes theft from commoners, non-lethal fighting, and trespassing in a non-guard/palace building. This will always get you reported and the people may scream for help summoning guards. The gold price for surrendering is higher and there is no run option. If you already have a High level crime on your rap sheet that you have not spend time for (you ran) they will not let you surrender, and will fight to the death for this level. Finally is High-class crime. It includes Trespassing in a Guard/Palace area, theft from these areas, and murder. You will be able to fight or surrender. there is no pay gold option. if you run they will be on the lookout for you for 3 in game days, and they will have no lenience for mid level crimes. The guards will be immediately yelled for if any remain to scream.
That is all for a basic area ( i believe there are 7). some will be different. They will always allow you to surrender or pay gold in a kind or poor place. harsh places move every thing down a level and high level crimes means no surrender.
Now to the reporting system. When you are reported a notice is placed for you arrest for varying amounts of time based on your crime and area committed. You will be confronted on site. If a bounty is in place normal NPC's may tell guards where you are if they see you. only snitches do so normally.
Well what do you think? good right!
Do you guys want a TL;DR?