I try to think about my conversations with people, and how I've heard people talk. You have to smooth it out in writing -- no one wants to read a lot of um, uh, ah, or things like that. There's less stumbling in written dialogue, I think, but that's okay because it's written and you don't want the reader tripping over it.
My take on creating believable dialog is to first make it tell part of the story. Dialog for dialogs sake is distracting.
Don't feel like you have to fill in all of the blanks for the reader either. Let the dialog imply what is happening. The reader will fill in the rest using other parts of the story and their own past experiences.
Writing dialogue is a lot like writing erotica. On the one hand, obviously artificial constructions are bound to be off-putting. On the other hand, absolutely authentic dialogue just doesn't sound "right" when seen on the printed page. What we're looking for is a sort of stylized reality, which obeys its own rules.
I learned this the first time I tried to write a play. I tried to make the dialogue remorselessly authentic in dialect and pacing, but another playwright pointed out that it wasn't working because it wasn't what the audience expected to hear.
A major point of written dialogue, though, is that you shouldn't replicate actual speech. If you think otherwise, record a couple of people speaking for a few minutes and then listen to it. It will be nearly unintelligible, repetitive, and incomplete. It's like sets and costumes in a play. If you go up on stage, you'll see that what is actually there isn't how you see it from the audience. You need to find a median between reality and stilted.
The type of story, for me, also influences how I write dialogue. Epic fantasy demands more complex and dramatic dialogue, while a story about modern street people requires a lot of slang and awkward conjunctions. The key for believability lies in the context of the story.
First, use dialogue to bring a character to life or to move the story along. But don’t use dialogue to dump information. It will invariably sound false and clunky.
Second, remember that, in real life, people seldom follow the script. In particular, people seldom answer questions with neat and tidy answers.
Third, as a general rule, keep it short. People seldom make speeches when they are having a conversation.
Fourth, when using dialogue tags, keep it simple. You rarely need anything other than ‘he said’, ‘she said’, ‘he asked,’ ‘she replied’.
And maybe a fifth: be careful with dialects and accents. A little goes a long way; and too much can just make it difficult for the reader to read.
I wish I could contribute more to the thread than a summary, but better writers than I have already spoken.
http://i.kinja-img.com/gawker-media/image/upload/s--IfOrTigP--/c2wzqx4jyhicpg7uj3aa.gif
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