A conversation system allowing for complex, open-ended conversations with users and method of its operation are disclosed. An example method includes identifying a conversation and a user, encoding the user's input message and finding codes in other texts, generating responses, and selecting an appropriate response, and sending the selected response to the user. The conversation system utilizes various methods, scoring, codes, and the like to find the appropriate responses. Example methods also include steps for sending short sentences representing action, or sending a “thought” or “daydream” to the user that reveals the emotional state of the conversation system with respect to the user, and steps for changing that emotional state. The system avoids reliance on artificial neural networks and keeps track of the context of a conversation by saving conversation codes in a database.