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Multi-objective data envelopment analysis: A game of multiple attribute decision-making

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  • Chen Yuh Wen

    (Institute of Industrial Engineering and Management, College of Engineering, Da-Yeh University, Chang Hwa, Taiwan)

Abstract

Aim/purpose ‒ The traditional data envelopment analysis (DEA) is popularly used to evaluate the relative efficiency among public or private firms by maximising each firm’s efficiency: the decision maker only considers one decision-making unit (DMU) at one time; thus, if there are n firms for computing efficiency scores, the resolution of n similar problems is necessary. Therefore, the multi-objective linear programming (MOLP) problem is used to simplify the complexity. Design/methodology/approach ‒ According to the similarity between the DEA and the multiple attribute decision making (MADM), a game of MADM is proposed to solve the DEA problem. Related definitions and proofs are provided to clarify this particular approach. Findings ‒ The multi-objective DEA is validated to be a unique MADM problem in this study: the MADM game for DEA is eventually identical to the weighting multi-objective DEA. This MADM game for DEA is used to rank ten LCD companies in Taiwan for their research and development (R&D) efficiencies to show its practical application. Research implications/limitations ‒ The main advantage of using an MADM game on the weighting multi-objective DEA is that the decision maker does not need to worry how to set these weights among DMUs/objectives, this MADM game will decide the weights among DMUs by the game theory. However, various DEA models are eventually evaluation tools. No one can guarantee us with 100% confidence that their evaluated results of DEA could be the absolute standard. Readers should analyse the results with care. Originality/value/contribution ‒ A unique link between the multi-objective CCR DEA and the MADM game for DEA is established and validated in this study. Previous scholars seldom explored and developed this breathtaking view before.

Suggested Citation

  • Chen Yuh Wen, 2019. "Multi-objective data envelopment analysis: A game of multiple attribute decision-making," Journal of Economics and Management, Sciendo, vol. 37(3), pages 156-177, September.
    • Handle: RePEc:vrs:jecman:v:37:y:2019:i:3:p:156-177:n:6
    DOI: 10.22367/jem.2019.37.08
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    References listed on IDEAS

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    More about this item

    Keywords

    Multi-Objective Linear Programming (MOLP); Data Envelopment Analysis (DEA); Multiple Attribute Decision Making (MADM); Research and Development (R&D) efficiency;
    All these keywords.

    JEL classification:

    • C44 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Operations Research; Statistical Decision Theory
    • C57 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Econometrics of Games and Auctions

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