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1. Open to abuse from human. You pay 200 - 400 ducats for a province. Or more likely I give you 3 crap provinces that just add to my research penalty for that nice juicy one and since you can't defend them I'll take em back next war etc etc
2. How would you code the AI?
It's good idea but would hard to implement I think. You'd need a different and more complex peace negotiation system.
For MP the ability to trade provinces at peace would be nice. You could make the AI refuse all offers maybe.
I disagree DrGrieve. There could be no 'buying' provinces for 400 ducats when decent provs can go for 15-20%. The AI actually is pretty swave at rejecting your demands, but it does tend to offer up it's colonial empire rather easily.
It could be done... with a lot of work and balancing. You could make an advanced algorithm to determine how much the AI wants a province, factoring in everything; how many of it's own provinces it borders, what countries they gain a new border against, manpower and all those factors, national provinces, culture, religion etc.
I would just settle for the AI being more sensible in its decision making under the current system. It's really pretty ridiculous how they'll reject a peace offer from you that is worth half of what you've "earned," then come back to you shortly thereafter with a peace offer equal to or better what you've "earned."
It sure would be nice to be able to swap controlled provinces. The AI has one of mine and I have one of his - so let's trade. But there would need to be a lot of work done to implement anything more complex than what is there now.