On Value Efficiency and Data Envelopment Analysis

Rolf Fare, Shawna Grosskopf and Gerald Whittaker
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Rolf Fare: Department of Economics, Oregon State University, Corvallis, Oregon 97331, USA
Gerald Whittaker: Agricultural Research Service, USDA, Corvallis, Oregon 97330, USA

Indian Economic Review, 2004, vol. 39, issue 1, 81-88

Abstract: This paper builds on earlier efforts to integrate preferences into a DEA model. Rather than including an explicit utility function as a constraint to a DEA problem as in F äre et al. (2002), here we use the notion of dominance to identify a ’¡Ærevealed’¡Ç indifference curve, which is then included in the DEA model. This allows us to identify what Halme et al. (1999) call the most preferred solution (MPS) as part of the solution to our modified DEA problem. This in turn allows us to decompose what they would call value efficiency into a technical and preference related component.

Keywords: Value Efficiency; DEA (search for similar items in EconPapers)
JEL-codes: C61 D21 (search for similar items in EconPapers)
Date: 2004
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