When Oblivion had just been released, I read that the developers had managed to elaborate a much higher AI for the npc's than they actually decided to put in the game. For example, I read during the production there had been episodes like corrupt guards poaching in the forest and other guards trying to arrest them, and with the arrival of reinforcements for both sides, the city was temporary left without guards, so every shop was immediately robbed by thieves, leaving them completely empty.

Is it true, what do you think? If so, it's a pity they didn't put this kind of AI in the game.

I never heard of that example, but yes, they did talk about some ideas that never made into the game.

There was a lot of odd behaviour with the AI too, (like the one NPC that went around town buying every item, leaving all shops empty) so they probably had to back-scale some of their plans because they couldn't get them all functioning together. Or due to time limits.

I remember the lady telling off her a dog and picking up a bow and shooting arrows at the ceiling