Fogbound -
After you set the AI tires as Andy GT mentions (from the Driving Option Screen, which is also where you set the race difficulty level), you should also set tire wear.
To set the tire wear, after you've picked your car and race track, but before you actually start driving, go to the grey Options box (which is next to the red Quick Tune-Up box), and click on the Arcade Box (which is also where you can set the number of laps for the Arcade race), and set your tire wear. There are three levels: Strong, mild and none. If you set it to Strong both your tires and the AI tires will wear out as you race. And if the AI is on soft tires they will pit quite often.
Good luck,
GTsail290