Miriam: Oh, don't mind me. I just spent a long time in graduate school.
Mikey was talking about how there needs to be some hidden information in an AI. At a very high level, and I'm going to abscond with his thought and talk a little bit about the field of "believeable agents". Believeable agents is what the graphics/AI fields agree to call things like Sims or Catz. A chatbot is essentially an unbelieveable agent almost immediately, while Cookie (the host from You Don't Know Jack) is trying very hard to believeable.
Speaking of YDKJ, Jellyvision has a neat collection of rules about how they structured Cookie's commentary, and it's a great resource for text-generation. It's good reading if you're trying to design conversation interfaces.
http://www.jellyvision.com/ici/jp/jackp ... sshort.pdf
The monsters in Black and White aren't staggeringly complicated internally (a series of interlocking hand-edited decision trees, if I recall correctly), but, as Mikey points out, they were surprising and unpredictable (such as being able to accidentally get a monster in a state where it can only poop if it first finds a boulder and tosses it over its right shoulder). It's this goofiness that gives them personality. (In fact, players complain that the monsters lose their personalities once they become well-trained for helpful play---they become a faceless cog in the war machine.)
So, if you have an agent in your game that has lots of hidden state (emotions about others, needs, desires), the player can have fun determining those needs and desires by observing the character interact with an environment and then deducing what makes them tick.
Then, the player can apply torque to the character and see how it makes them change, and those changes will be rich and personality-driven because of this hidden information.
In the long run, this hints to me that the "camera", the level of abstraction in such a game, would be very distant, very abstract, so that players will fill in gaps in the narrative with their own ideas.
The Sims works this way---you hear the characters talking to each other and their body language and tone of voice, but the words are just gibberish. The other cues are enough to let players fill in their own story for what happened, and it's extremely effective because human beings love to guess what makes people tick.