This is very much related to Generative Agents: Interactive Simulacra of Human Behavior, where 25 GPT-simulated characters hung out in a simulated town.
“Generative agents wake up, cook breakfast, and head to work,” the researchers wrote in a preprint paper posted to the arXiv outlining the project. “Artists paint, while authors write; they form opinions, and notice each other, and initiate conversations; they remember and reflect on days past as they plan the next day.”
The interesting part of the paper (IMO) is less NPC's planning parties and more the reflective process they use to create memories to carry forward. It's basically REM sleep.
