Just did a quick game to test out AI bidding under well controlled conditions.
It was me and 5 hard AI (I'm assuming hard doesn't cheat?), LOCKED teams (yes, the AI are all on separate teams) and this was the first pirate raid.
Here's what happenned:
Pirate raid alarm goes off, and by the time I look at the bounty display there's already 250 on my head. My average ranking is ~3. No bids on anyone else... time to fix that.
500 on AI 1, 750 on AI 2, 1000 on AI 3.
The AI replies by... yes! Putting down an additional 1250 on me, to get me up to a nice round 1500.
I haven't verified this... but it's quite a suggestive amount. Guess what happens when you divide 1250 by 5? That's right, you get 250... exactly one bid for each AI.
I'll repeat this with 2, 3 and 4 hard AIs to verify, but it very much looks like the AIs collude with each other.
Well, colour me surprised. I made a few new games and sat on my ass for the first 14 minutes, waiting for the first pirate raid. This time the AI not bother to bid against me... apparently having two scouts to my name put me beneath their notice.
In fact, none of them could be bothered to bid AT ALL. I could play with the bounties to my heart's content, and there was not a single attempt by any of the AIs to intervene. If I'm no threat, suddenly their own skins are no longer worth saving!