A bargaining game model for measuring performance of two-stage network structures

Juan Du, Liang Liang, Yao Chen, Wade D. Cook and Joe Zhu

European Journal of Operational Research, 2011, vol. 210, issue 2, 390-397

Abstract: Data envelopment analysis (DEA) is a method for measuring the efficiency of peer decision making units (DMUs), where the internal structures of DMUs are treated as a black-box. Recently DEA has been extended to examine the efficiency of DMUs that have two-stage network structures or processes, where all the outputs from the first stage are intermediate measures that make up the inputs to the second stage. The resulting two-stage DEA model not only provides an overall efficiency score for the entire process, but also yields an efficiency score for each of the individual stages. The current paper develops a Nash bargaining game model to measure the performance of DMUs that have a two-stage structure. Under Nash bargaining theory, the two stages are viewed as players and the DEA efficiency model is a cooperative game model. It is shown that when only one intermediate measure exists between the two stages, our newly developed Nash bargaining game approach yields the same results as applying the standard DEA approach to each stage separately. Two real world data sets are used to demonstrate our bargaining game model.

Keywords: Data; envelopment; analysis; (DEA); Two-stage; processes; Efficiency; Intermediate; measure; Nash; bargaining; game (search for similar items in EconPapers)
Date: 2011
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (44)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ejores:v:210:y:2011:i:2:p:390-397

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