I'm working on something similar but instead of basing my efforts on the generator agents paper I'm basing it on a technique I call narrative generation. It requires far less context and fewer prompts, and focuses on generating narrative aspects and letting the traditional game engine things simulate the remainder of the world.
As an example, with the system I am building you only need to input what action the player has taken, and all the NPC's actions and dialogues will be generated.
As an example, with the system I am building you only need to input what action the player has taken, and all the NPC's actions and dialogues will be generated.