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In the AI files, if we change, say Infantry from 85 to 80 and armor from 1 to 6, will this actually work in the game? Or are these just guidelines that dont mean squat?
They work to some extent but are only guidelines. I tested this by setting up a hands off game as Guatemala saving on 2 Jan 36. I edited the relative_build_scheme = for several major countries. I reset the relative_build_scheme = yes to no for those countries.
The Soviet Union built about 10 cav div and lots of fighters by 1941. Germany built more Pz div. The USA built fewer marines. But they all eventually ended up building lots of mech inf div even though I reduced that.
They work but it's a bit quirky to understand exactly what they will build (keep in mind that with relative on it will count what you already have existing - thus for example you increase naval build priority but that nation already has "too large" of a navy then you won't see any naval building).
In the AI files, if we change, say Infantry from 85 to 80 and armor from 1 to 6, will this actually work in the game? Or are these just guidelines that dont mean squat?
Just to add to what's already been said, I have seen the most change to the AI's builds if the change is significant. So, in your example, I would expect to see a significant increase in armor, but not really a noticeable change in infantry.
For myself, I reduced Germany's dive bomber builds, and gave the surplus (for the most part) to infantry. I did notice a drop in dive bombers when I did this.