Like Myth has said, Im fairly certain that the brain is working, its just not always getting the correct signals from the nerves. Ive been in a number of battles where the AI showed competence, and of course, others where its been so brain-dead I was pretty sure it was in a coma.
Same with the CAI. Sometimes its smart, like realizing that their 10 unit army wont stand a chance in an open field battle against my 20-unit elite stack, so they fell back to their fortified city where they can defend much better instead of wasting their units in a small town battle which I will almost surely win. Another time they drew out my armies, then snuck past and attacked my now undefended towns. But of course, other times they do stupid things like besiege fortified towns with 4 units.
Considering that I have seen competent AI, I am fairly convinced that it is something that can be fixed.
I also think it is unfair to compare CKII and the TW games. One is a turn based-world domination/real time battle game and the other is a family survival game. The political system in CKII is unmatched, in my opinion, but the battles are very, very shallow. Its merely a numbers game and there is very little that you can do to influence the tide of battle once the ball gets rolling. Dont get me wrong, I love CKII, its one of my favorite games, but in no way does it satisfy my itch that the TW games do. And the warscore thing can be annoying at times. Want only one or two of the enemy's territories? Okay, fine, defeat the enemy army, lay siege to the territory in question, capture it. Warscore at 35%. Great, now what? Now I have to invade the enemy lands to lay siege to even more towns just to get the warscore up to 100%. During which time the enemy can raise even more armies to attack you. Annoyed me at times. And when I got rich enough and large enough, mercenaries were essential to keep up an empire, as your tiny retinue is laughably unable to protect your realm. And dont get me started on long wars.
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