Boy, dearmad, you make it sound even more dog-eat-dog than me.
I agree to an extent. If by self-serving, they make alliances and treaties that are intelligent, I agree. The AI can be incredibly stupid sometimes. I'm playing CtPII right now, and the Scots WILL NOT make peace with me even though its clearly in their best interest. I'm the most powerful civilization in the world, and they won't get with the program. I even want to Ally with them (Diplomatic Victory), and they would just rather be wiped off the face of the earth.
Unfortunately though, the more important issue at hand is improvement of the AI. I don't think that you can improve the AI to be as cunning as that. The AI is already looking out for itself, but its just not that bright. To expect it to understand when to break treaties and when to milk some alliances and not others, and all of the other little nuances that we take for granted, is ridiculous. Hopefully, it will at least be BETTER in Civ III.
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"...The highest realization of warfare is to attack the enemy's plans; next is to attack their alliances; next to attack their army; and the lowest is to attack their fortified cities." - Sun Tzu
"I think anybody who doesn't think I'm smart enough to handle this job is under-estimating" - George "Dubya" Bush
Dom Pedro II - 2nd and last Emperor of the Empire of Brazil (1831 - 1889). :Hannibal3