Grand Theft Auto IV provides an interesting example. You play as Nico Bellic, a murderous thug. You start the game hoping to escape that life and start over, but your hope is undermined by your desire for bloody revenge against someone who betrayed you. Your position at the low end of the economic spectrum and your hapless, gambling-addicted cousin Roman don't help matters either, pulling you toward the violent life you're trying to leave.
Nico is already a bad guy, but he's made sympathetic by his struggle, and the player has opportunities to have him make moral choices. Consider the story of drug dealers Playboy X and Dwayne Forge, drug-dealing allies separated when Dwayne goes to jail for ten years. When Dwayne gets out of prison and wants to rejoin the gang, Playboy X first welcomes him. But Dwayne is out of touch with how the gang has developed, and Playboy is afraid Dwayne wants to take over. These two old friends have grown apart, and eventually they each decide the other needs to die. Both of them turn to you to do the job. As Nico, you must decide if you're going to kill Playboy, a successful gang leader who has given you a steady stream of paying work, or Dwayne, a struggling ex-con trying to get his (criminal) life together. Either way it's a betrayal. As a criminal, Nico should probably kill Dwayne and keep the lucrative relationship with Playboy. But as a human, Nico clearly relates to Dwayne's struggle while Playboy is just another swaggering jerk. You make the choice. And while that choice doesn't seem to have much effect on Nico's larger story, it does affect how you see Nico and how you make the rest of his choices. That's a much more credible and engaging scenario than BioShock's, where you survive a plane crash and promptly have to decide whether to rescue little girls or murder them.
So let's design this feature.
We'll start with a narrative premise. You're a sheriff in the old west. Previously you were a cowboy and even rustled some cattle, so your hands aren't clean. Lately you've worked as a ranch hand and bagman for Jake Villain, a cattle baron who is the richest and most powerful man in the valley. Last year the sheriff died in a gunfight, and Jake convinced you to run for election as his replacement. Jake financed your campaign, so while you want to be a good sheriff you also want to keep Jake happy.
You can see where this is going. You owe Jake just about everything, and he knows it. He believes you're still working for him and that the badge changes nothing.
Is he right? Answering that question is the point of the game. At the end, one of two things happens. You help Jake suppress the townsfolk and get elected to the state legislature, with Jake backing you the whole way, or you turn on him and send him to prison-and wear your badge with pride.
At the start of the game, everyone in power assumes you're on the bad path. They know you're Jake's man and treat you accordingly. But now you're here to help. And when they ask for help, they expect you to give it.
For the first part of the game, we don't want you gunning people down without good reason. You may be in Jake's pocket but you aren't a vicious thug. Early missions establish the situation and include a few favors to Jake that you can sidestep without serious consequences. Later missions introduce a gang of outlaws secretly working for Jake. How you handle them is the second act of our story and lets you get deeper down either path without forcing a confrontation with Jake, whose involvement is a secret until the end of the act. The final missions are where your choices really pay off and you begin working actively for or against Jake in the context of a range war between him and some rival families.