In a narrative, irony refers to some sort of discrepancy, though that discrepancy may come in a variety of forms. For example, irony can be a discrepancy between what a character says and what he means, what a character says and what he does, or what is intended by a character or a situation and what really occurs. Irony can also be a discrepancy or a juxtaposition between two or more actions or two or more characters.
Situational irony is what people typically mean when they just use the word "irony" in reference to a narrative. This type of irony refers to a discrepancy in which events in a narrative turn out contrary but strangely appropriate to what is expected. In other words, a story creates a certain set of expectations, but the expectations are not met and the resulting events are perversely appropriate. For example, a stunt man jumps a car from a 50-foot building and survives unharmed, but then goes home, slips in his shower on some liquid soap he spilled earlier in the day and breaks his arm.
Dramatic irony is a discrepancy between what an ignorant character says about his circumstances and what the reader knows to be true. The character is ignorant of certain circumstances that the reader is aware of and does not realize that he is saying something that applies to his own situation. For example, in Sophocles’ "Oedipus," Oedipus says, “I’d sooner marry my own mother than…” to identify the most grotesque act that he can imagine doing. What the reader already knows, and what Oedipus is still ignorant of, is that he is already married to his own mother.
Verbal irony is a discrepancy between what a speaker says and what he means. An example of verbal irony is sarcasm, in which a character pays someone a compliment, but really means it as a put-down. According to Wayne C. Booth’s "A Rhetoric of Irony," verbal irony comes in two forms: stable and unstable. Stable irony is a type of verbal irony where the author’s real meaning is clear to the reader, and unstable irony is a type where the author’s real meaning is unclear and the reader has a difficult time determining whether the author is expressing his real views.
Socratic irony, named after Socrates’ teaching method, refers to a position that a teacher or instructor assumes in order to making his or her students think. In narrative, Socratic irony appears whenever a teacher pretends to be ignorant about a particular subject matter and open to opposing points of view in order to allow students to think through a situation and come to the correct conclusion on their own.