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Identifying Suspicious Efficient Units in DEA Models

Author

Listed:
  • Krivonozhko, Vladimir E.

    (National University of Science and Technology «MISiS»)

  • Førsund, Finn R.

    (Dept. of Economics, University of Oslo)

  • Lychev, Andrey V.

    (National University of Science and Technology «MISiS»)

Abstract

Applications of the DEA models show that inadequate results may arise in some cases, two of these inadequacies being: a) too many efficient units may appear in some DEA models; b) a DEA model may show an inefficient unit from the point of view of experts as an efficient one. The purpose of this paper is to identify suspicious units that may unduly become efficient. The concept of a terminal unit is introduced for such units. It is shown by establishing theorems how units can be identified as terminal units and how different definitions of suspicious units are related. An approach for improving the adequacy of DEA models based on terminal units is suggested, and an example shown based on a real-life data set for Russian banks.

Suggested Citation

  • Krivonozhko, Vladimir E. & Førsund, Finn R. & Lychev, Andrey V., 2012. "Identifying Suspicious Efficient Units in DEA Models," Memorandum 30/2012, Oslo University, Department of Economics.
    • Handle: RePEc:hhs:osloec:2012_030
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    File URL: https://www.sv.uio.no/econ/english/research/unpublished-works/working-papers/pdf-files/2012/memo-30-2012.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    Data Envelopment Analysis (DEA); Terminal units; Efficiency; Weight restrictions; Domination cones;
    All these keywords.

    JEL classification:

    • C44 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Operations Research; Statistical Decision Theory
    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • C67 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Input-Output Models
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity

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