Good fiction writers possess the ability to create believable characters with depth and dimension who develop throughout a story. This requires a thorough understanding of human behavior.
To write better characters, carefully observe your own behavior and the behavior of friends and family members. Make an effort to capture the richness of your experience in your writing. Imagine what might cause someone to commit a crime, contemplate suicide, join the peace corps or compose a symphony.
Writers get to live a thousand different lives through their characters. You can be a cowboy, a CEO, a homeless girl, a train robber, a visitor from another planet, or a pizza delivery guy -- perhaps all in the same book. The ability to model believable behavior in each of these characters will depend on your willingness to ask open-minded questions about how people from all walks of life think, feel and act. You can model your characters after someone you know, or even after yourself, but be careful not to make the connection too obvious. Others may resent the role in which they've been cast.
When designing characters, create diversely and imagine how the various combinations of different personalities will show up in different situations. Think of your book as a chemistry lab and your characters as components that, when mixed, will produce interesting and potentially explosive results.