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While walking from one town to another I end up in a lot of random encounters with caravan traders. I have been choosing to slaughter all I come across. Is this going to effect me negatively later on? Will it make it so I'm unable to take caravan jobs or anything like that?

I figured since they have slaves with em, they can't be very good people, so I kill em and take the sweeeeet loot(can't believe I nearly paid 3 grand for a sub machine gun, theyre so plentiful in the wasteland for the price of a couple bullets).
As far as I am concerned, the only consequences are negative karma. Slavery is widely accepted in the wasteland, you should get used to that ;)
There are "good" and "bad" merchant caravans. The "good" caravans don't have slaves, while the "bad" caravans do have slaves. IIRC, you actually get positive karma for killing the merchants and guards of "bad" caravans.

Beyond karma, I don't think there are any specific consequences.
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UniversalWolf: There are "good" and "bad" merchant caravans. The "good" caravans don't have slaves, while the "bad" caravans do have slaves. IIRC, you actually get positive karma for killing the merchants and guards of "bad" caravans.

Beyond karma, I don't think there are any specific consequences.
Fantastic, thanks.

Seems to be FAR more random encounters whilst wandering the wasteland in Fallout 2 compared to the first. To think i nearly blew 3 grand on a submachine gun in a shop when all i had to do was go for a short walk and mow down some caravanners. So easy getting money, goods, and guns in Fallout 2.
Yes, the encounters seem to unbalance the game once you leave the Den. Too many gangs carrying good weapons between there and Vault City (although you'll probably die a few times against them first).