I think the AI in many games could've been tons better if the devs just knew wth they were doing. I remember Total Annihilation, a game that had a ton more AI (effectively, not actually) than almost every other RTS to date, because of how the in-game commands were designed and how the AI was scripted with that in mind.
To me, the gaming industry seems to be showing off LESS intelligence nowadays than in certain games before. I guess they're all trying to implement actual AI but at the same time being allergic to illusory AI (an incredibly powerful game feature if implemented correctly, because you can potentially make the AI smarter than the player). Let's call it "reactive AI" instead, as that's more accurate.
I like to think that a good AI is an AI that is hard (if not impossible) to predict. But most games nowadays, maybe with the exception of Starcraft 2 and similar (although that too could've been a lot more unpredictable), are horrendously predictable. I'm thinking that a given mob should be choosing somwhat randomly between more than one AI construct, depending on the information that the mob gets of the player. If the player is passive, the AI should be aggressive and vice versa. But also break it up and then suddenly be behaving differently 30% of the time (not just because something happens that changes its behaviour).
You know, simple Texas Hold'Em psychology.
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I think one of the biggest mistakes of the gaming industry is to exclusively try to make the cpu as smart as possible. At least that's what it looks like their doing, from a gamer's perspective. The best form of AI, IMO, is one that breaks up smart decisions with a little bit of stupidity here and there, so that it leaves the player wondering "what the heck just happened"? It's kinda embarassing when you see a human NPC having the exact same behaviour as a Wild Boar.