Hyperdopaminergic states in mental disorders are associated with disruptive deficits in decision making. However, the precise contribution of topographically distinct mesencephalic dopamine pathways to decision-making processes remains elusive. Here we show, using a multidisciplinary approach, how hyperactivity of ascending projections from the ventral tegmental area (VTA) contributes to impaired flexible decision making in rats. Activation of the VTA-nucleus accumbens pathway leads to insensitivity to loss and punishment due to impaired processing of negative reward prediction errors. In contrast, activation of the VTA-prefrontal cortex pathway promotes risky decision making without affecting the ability to choose the economically most beneficial option. Together, these findings show how malfunction of ascending VTA projections affects value-based decision making, suggesting a potential mechanism through which increased forebrain dopamine signaling leads to aberrant behavior, as is seen in substance abuse, mania, and after dopamine replacement therapy in Parkinson's disease.