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Affective gaming has received much attention lately, as the gaming community recognizes the importance of emotion in the development of engaging games. Affect plays a key role in the user experience, both in entertainment and in `serious' games. Current focus in affective gaming is primarily on the sensing and recognition of the players' emotions, and on tailoring the game responses to these emotions. A significant effort is also being devoted to generating `affective behaviors' in the game characters, and in player avatars, to enhance their realism and believability. Less emphasis is placed on modeling emotions, both their generation and their effects, in the game characters, and in user models representing the players. This paper accompanies a tutorial presented at ACII2009, whose objective was to provide theoretical foundations for modeling emotions in game characters, as well as practical hands-on guidelines to help game developers construct functional models of emotion. While the tutorial covered models of both emotion generation and emotion effects, this paper focuses on modeling emotion effects on cognition.