How does making merit affect karma?

I believe I understand the basics of karma as the effects of our intentions and actions (good & evil) which will play some role in this and future lives. But how does merit making affect karma? If a person has done something evil in the past can making merit improve one's karma? Is merit gained even for insincere actions such as when people do something good but are motivated by gaining reputation or status? Or is merit not a real thing but just a concept which functions to encourage people to do more good deeds so they'll have less time or inclination to do bad deeds?