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.