Why do authors make setting and character shifts? What effects do these shifts have on the book?

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Writers might do this to develop their plots, themes, or perspectives.  Perhaps one of the masters of this is William Faulkner, whose novels moved across decades and characters.  Although this certainly makes Faulkner a challenging read, the result is that Faulkner's books have created not just a single story, but a whole tapestry of characters, communities, and times.  As readers, we see how these characters and lives intersect.

Other modernist writers also employed this technique to demonstrate the tenuousness of what we might call "truth."  By manipulating perspectives and settings, modernist writers called into question a linear understanding of the world.  In other words, this technique works to support the larger theme of an unknowable universe.

Of course, this technique is very common, and is used for many reasons.  Another way this is useful is to build suspense.  In thriller, noir, and mystery novels, writers can show the readers what various characters are thinking and planning.  Thus, we as readers are privy to information the heroes are not.  This can add to the suspense as we read.  We think to ourselves, "No, no, no!  Don't open that door!  It's a trap!"

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Authors write in order to reveal what is it like to be part of the human race. Humans change with time, as do the places and times in which they live. In order to create a believable story, authors change their setting in order to reveal how their characters react to those settings. And, since all humans change, authors also have their characters change in reaction to time, place. events that occurs to them or that they cause to occur. That way they can reveal their beliefs about humanity in a way readers will believe them.
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This question is easily answered when we consider a little bit about Narrative Theory. Human being think in narrative. We think in story form. So, for an author to make his or her particular story memorable, in order to make it stick out from the the story of how we got our coffee in the morning, or what happened on our way to work, he or she must have conflict and points of change.

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