[<< wikibooks] LaTeX/Manually Managing References
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A reference list is nothing more than a, well, list. A list with anchors, or keys, to properly refer to the different list items. The list environment is called thebibliography, it takes one mandatory argument. Every item in the list starts with \bibitem{bibkey}.
Citing an entry from your references works similar to the label and ref mechanism. The label is the key given to the bibitem, referencing is done by \cite.

cite returns the number of our list entry in the list in brackets. An optional argument can be given to add some text within the brackets.
As one can see, there is no sorting. Sorting is left to the document author.
Style and punctuation has to be consistent in your bibliography. If you have trouble remembering to put the title into quotes, define a helper command and use it. There is another inconsistency in the image above. Can you spot it? 

You may ask yourself what the mandatory argument of the environment is doing. You can define your own label for any entry in your list. Use your widest entry inside the argument. Using that optional argument, you can create an author-year style.

= Making use of package natbib to style citations =
You can load package natbib to assist you with in text citations. The thebibliography environment needs to have a stricter formatting.

The optional argument for bibitem contains the short author list at the beginning, the year in parenthesis and the long author list at the end. Please note that there are no spaces around the parentheses, they separate the year of the publication from the short (beginning) and long list at the end. 
natbib introduces new commands for citing and styling those citations, the package manual will give you more details.
Keeping track of all the details and checking for consistency will cost a lot of time.

== Bibliographies per Chapter or Section ==
Package chapterbib can be used to make separated bibliographies within a document. 
It is important to have the content separated as well, meaning every section that gets its own
bibliograpy needs to be in a separated file. In the main document, \include is 
used to put everything together. The following example creates those extra files on the run. This
method is great for examples, but filecontents should not be used for real projects.