ABSTRACT
People actively attempt to create and maintain positive moods and to escape from negative moods by engaging in various activities. The principle of homeostasis explains the essence of the mood-management system: adjustments of individuals' moods and activities help maintain constant their conditions of life. We model the dynamics of mood and mood-management behaviour through a pair of interdependent, linear differential equations and estimate the equations using mood and behaviour data collected from an adult panel. Because empirically fitting continuous-time differential equations to intermittent observations is uncommon in the literature, we show how to transform differential equations into equations that can be estimated using simultaneous-equation regression methods. Our adult panel shows strong homeostasis in mood management with mood episodes of several hours and no evidence of endogenous mood cycles.
