Realistic characters are essential to writing a great script. Who cares about a movie that has boring characters? Or characters that remind you of cardboard? Realistic characters are complex to write, but the rewards of clear, defined, fun characters are immense.

A great article on the Ancient Greeks and how they dealt with the subject is at Writer's Digest. Link at the bottom.

Hippocrates broke characters into four different basic classifications. You can use these basic species of characters as a basis for compiling them until you understand the more subtle complexities. The key to writing realistic characters in your scripts is broken down into two components: Your characters' actions and your characters' dialogue.

Actions:

A character's actions are defined by his or her priorities. This gives you an order in which a character might do something assuming the actions of other characters or obstacles don't further impede or change the actions of said character. To illustrate this point, all you have to do is look at yourself and your priorities. Right now, you're reading this essay. This is your agenda item because you have to read it for a class. You might also be hungry, but you're going to put that off until you finish this short essay because you want to get done. Finally, you have to meet a friend back at your dorm room. Now we have a list of your immediate priorities:

1) Read essay
2) Eat
3) Return to dorm room and meet friend.

Now let's say you're a character in a murder mystery. The writer of this murder mystery wants you to discover a body in your dorm room, but your character's agenda is to pass this class and get something to eat first. How do you get your character to the body? It goes against logic that a character would suddenly bolt upright while reading an essay to run back to his or her room to discover the body. You need a compelling reason based on logic.

Logic would dictate your character might have to go back to his or her room because he left an important assignment there. However, laziness might trump that. Why can't you just turn the assignment in the next class? Plus you still haven't eaten. The writer adds a compelling reason: If you don't turn in the assignment today, you will fail the course. Now that we have a compelling reason to change the character's priorities, we update accordingly:

1) Return to room
2) Retrieve assignment
3) Turn in assignment to get grade
4) Finish essay
5) Eat
6) Return to dorm and meet friend

But with the discovery of your dead friend in the dorm room, the priorities change yet again. Just like you, a character's priorities are constantly being updated and modified based on the world around him and his world view. It needs to follow logic. Always write characters at the height of their intelligence. That doesn't mean characters don't make mistakes, but it means that if there is a reasonable chance a character will figure something out, he probably should unless you develop more compelling reasons why he shouldn't.

Dialogue:

Writing realistic dialogue means you have to really listen to dialogue and the way people talk. It's simple. Go out to a public place and start eavesdropping on conversations. A good exercise is to (discreetly) transcribe some of the conversation you hear. Try to focus on key words and phrases that sound interesting to you. Get at least six or seven distinct voices.

Now that you have the voices, you can extrapolate further conversation. You should try continuing a conversation that you partially transcribed by bringing it to its logical conclusion. Remember, just like actions, dialogue should follow a character's logic until some compelling reason upsets the apple cart. Just as in physics, every action has a reaction (although not necessarily an equal one).

Here's a dialogue exercise I got from Writers' Digest magazine: Write some dialogue between two characters, but don't name them. Every other line should be the same character. The two characters should talk in a voice that's distinct enough to discern just by reading it, even if you start in the middle. Write two pages of dialogue then set it aside for a few hours. When you go back and read it start in the middle. If you can't distinguish the characters, you failed.

Another tip is to try writing a character based on how you talk. Not everyone is aware of their own personal speech quirks. I had a producer that was also the lead in a low budget movie. I wrote the dialogue for his character with stammers because I noticed he stammered too. Upon reading the script he asked, "What's this?" I told him I wrote the character just like he talked. He stammered almost constantly but was completely unaware.

Make the character and the dialogue extremely specific to you so that anyone else reading the manuscript can immediate pick out your voice without knowing the personal events and/or your name in the script. When you become more aware of how you speak, you can catch yourself inserting dialogue into a script that's really only specific to you. It's those sorts of dialogue traits that may infect multiple characters in your script and make them sound alike. By distinguishing your voice, you can more easily create new voices. The most realistic ones will always be slight variations of you. If you live in the Northeast, Southern characters are going to require more work for you.

Finally, the best way to test a character and his "realistic-ness" is to try living in that character's shoes for a short time. Read aloud the dialogue. Say to yourself, "Would I do this or that? How would I handle being in this situation?" The character may not share your priorities, but you can use your own priorities as a measuring stick. If the character isn't at least acting as logical as you would, you have to know why and your audience has to know why. Improv classes and acting classes can also make you feel more comfortable exploring character language and actions. At the very least, you might edit out difficult lines like this one I recently wrote: "Iggy, for two weeks you shushed the shit out of me." Later, when I actually had to say this line, it took about 15 takes to get right! What was I thinking?

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