Cross-efficiency aggregation method based on prospect consensus process

Lei Chen (), Ying-Ming Wang () and Yan Huang ()
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Lei Chen: Fuzhou University
Ying-Ming Wang: Fuzhou University
Yan Huang: Fuzhou University

Annals of Operations Research, 2020, vol. 288, issue 1, No 5, 115-135

Abstract: Abstract The arithmetic average method is usually adopted to aggregate cross-efficiency in traditional cross-efficiency methods. However, this method not only underestimates the importance of self-evaluation, but also ignores the subjective preference of decision-makers. This paper thus introduces prospect theory to describe the subjective preference of decision-makers in the aggregation process when they face gains and losses, then a new method is constructed to aggregate cross-efficiency. Based on the differences between the psychological expectations and aggregation results, the expectations are constantly adjusted until a consensus on aggregation results is reached. An aggregation result that is more acceptable to all decision-making units can then be obtained. Finally, the proposed method is applied to aggregate the cross-efficiency of 27 industrial robots to illustrate its effectiveness and convergence.

Keywords: Data envelopment analysis; Efficiency aggregation; Prospect theory; Consensus process; Convergence (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (8)

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DOI: 10.1007/s10479-019-03491-w

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