A DEA cross-efficiency approach based on bargaining theory

Abstract

Cross-efficiency evaluation is a Data Envelopment Analysis (DEA) approach that enables the efficiency and ranking of Decision-Making Units (DMUs) to assess the possibility of idiosyncratic weighting schemes. However, the existence of multiple optimal weights in multiplier DEA models implies the non-uniqueness of the cross-efficiency evaluation. This is normally dealt with using secondary goals that enable the optimal weighting vectors to be chosen. In this paper, a new method to discriminate between optimal weighting profiles is proposed based on bargaining problems and the Kalai-Smorodinsky solution. In this approach, the input and output multipliers are agreed upon by the peer DMUs.

Keywords:

• Data envelopment analysis
• cross-efficiency
• bargaining theory
• Kalai-Smorodinsky solution

Disclosure statement

No potential conflict of interest was reported by the author(s).

Additional information

Funding

The research of the authors has been supported by the Spanish Ministry of Science, Innovation and Universities under project PGC2018-095786-B-I00.