Your right screen cheat had no AI and doesn't really match what he described. It was just the first thing I thought of. The ship also kind of matches, except I don't know about split screen.
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Sounds like The Ship but I know it isn't.
By the way, if you like that kind of game have a look at Screencheat.
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Party Saboteur? http://store.steampowered.com/app/452320/
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I have forgotten the name of a game I want. I thought I had wishlisted it, but I went through my wish list and didn't see it. It's a local coop game for up to 4 players that all play on the same screen. Each one plays a different character, but nobody knows who is who. You have to blend in with the AI characters on screen and try to figure out who the other players are and assassinate them.
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