I just read Jeremy Parish's interview with Ken Levine of Irrational Games where they discuss the AI of the non–player characters in Bioshock Infinite. The original Bioshock was the first game that made me want a 360, but I eventually played it on Steam. I bet my poor iMac couldn't handle this, though... maybe I'll have to purchase a 360 after all.
The AIs are constantly watching each other, too. There's a part where a guy runs into another guy and knocks him over and starts beating on him. The way that works is, that's not a script, it's an A.I. going, "Hey, I'm available for something cool." And another A.I. goes, "You know what I can do? I can come over and beat the shit out of you." And the other A.I. says, "OK, cool, let's do that." But they can only do that in the right situation. Are they being shot at? OK, then no, they can't do that. Is something else going on? No, they can't do that. We have this whole library of content -- that library, for instance, or Elizabeth saying this or doing that -- but the system is constantly monitoring the playing and saying, "Is this the right time? Is this the right time?" And that's the most challenging thing we're doing with this game.
~ Ken Levine