In that case NPCs are the real people of the simulation. It is the playable character that knows it is not real. The NPCs are simulated to act and behave like i

In that case NPCs are the real people of the simulation. It is the playable character that knows it is not real. The NPCs are simulated to act and behave like independent entities with their own drivers and motivations. Therefore the NPCs are actually the most free characters in the simulation. The playable character just does what it is told by the player.