Can Super-Efficiencies Improve Bias Correction? A Bayesian Data Envelopment Analysis Approach

Panagiotis Zervopoulos, Angelos Kanas (akanas@unipi.gr), Ali Emrouznejad (a.emrouznejad@surrey.ac.uk) and Philip Molyneux (p.molyneux@leeds.ac.uk)
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Angelos Kanas: University of Piraeus
Ali Emrouznejad: University of Surrey
Philip Molyneux: Abu Dhabi University

A chapter in Advances in the Theory and Applications of Performance Measurement and Management, 2024, pp 21-31 from Springer

Abstract: Abstract It has been proven that DEA efficiencies, within the interval (0, 1], are overestimated for finite samples, while asymptotically, this bias reduces to zero. In the extant literature, the statistical inference approaches yielding the best-performing DEA estimates are the smoothed bootstrap and Bayesian DEA methods. All statistical inference techniques apply to DEA models yielding efficiencies between zero and one. This study presents a new Bayesian DEA approach that takes into account efficiencies and super-efficiencies aiming to improve bias correction. We prove that efficiencies and super-efficiencies are interrelated for finite samples. However, bias correction is statistically significant only in the case of efficiencies below one. The new Bayesian super-efficiency DEA approach yields estimates with lower mean absolute error and mean square error than the extant DEA statistical inference techniques referring only to efficiencies with right-censored distributions, where efficiencies are not allowed to exceed unity. Drawing on formal analysis, real-world and simulated data sets, we conclude that the new Bayesian super-efficiency DEA estimates are consistent of DEA parameters.

Keywords: Data envelopment analysis; Super-efficiency; Bayesian methods; Statistical inference; Banking (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:spr:lnopch:978-3-031-61597-9_3

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DOI: 10.1007/978-3-031-61597-9_3

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