Interesting, this reminds me of the stories that would leak about Bethesda's RadiantAI they were developing for TES IV: Oblivion.

Basically they modeled NPCs with needs and let the RadiantAI system direct NPCs to fulfill those needs. If the stories are to be believed this resulted in lots of unintended consequences as well as instability. Like a Drug addict NPC killing a quest-giving NPC because they had drugs in their inventory.

I think in the end they just kept dumbing down the AI till it was more stable.

Kind of a reminder that you don't even need LLMs and bleeding-edge tech to end up with this kind of off-the-rails behavior. Though the general competency of a modern LLM and it's fuzzy abilities could carry it much further than one would expect when allowed autonomy.