Instructions
Direct Carl to a nearby city or town street. This is where most of the NPCs will wander and appear -- other areas will have NPCs walking around but the streets are where you are most likely to find one. Consult the in-game map if you cannot find the nearest city street. Do this by pressing the "Start" button on a PS2 or Xbox controller and the "Esc" key on a PC keyboard.
Walk Carl past the pedestrian NPCs until you hear a comment from someone. NPCs are programmed by the game's developers to comment on Carl's appearance (clothing, haircut, tattoos and fitness).
Confront the person by answering back in a negative response. Do this by pressing the PS2 D-pad's "left" button or the Xbox D-pad's "left" button -- Carl will respond with a cutting or confrontational remark. Do this on a PC by pressing the "N" key. Carl will change his response several times depending on the NPC and the remark.
Confront the pedestrians in a more positive way by pressing the D-pad's "right" button on a PS2/Xbox controller instead of the left. Carl will respond with a complement or cheerful remark. Do this on a PC by pressing the "Y" keyboard key.