Agents for Virtual Environments

The OZ project was an early attempt to develop
artistically interesting, highly interactive, simulated worlds...to give users the experience of living in (not merely watching) dramatically rich worlds that include moderately competent, emotional agents.
In the last couple of years the research topic of AI in games has become fairly popular (very popular in the development community).
Agents need to be entertaining. This means they cannot be too good.
In many games, agents need to coordinate, either with the user or with other agents.
An active research platform is Gamebots for Unreal Tournament.