QuoteWhat Is AI for Games?
At its most basic level, "artificial intelligence" consists of emulating the behavior of other players or the entities (that is, all the elements of the game that can act or be acted upon—from players to missiles to health pickups) they represent. The key concept is that the behavior is simulated. In other words, AI for games is more "artificial" and less "intelligence". The system can be as simple as a rules-based system or as complex as a system designed to challenge a player as the commander of an opposing army.
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(http://software.intel.com/en-us/articles/designing-artificial-intelligence-for-games-part-1/) and here