On Pareto-optimality in the cross-efficiency evaluation

Mostafa Davtalab-Olyaie and Masoud Asgharian

European Journal of Operational Research, 2021, vol. 288, issue 1, 247-257

Abstract: Uniqueness and Pareto-optimality of cross-efficiency scores are two main issues in the cross-efficiency evaluation. We address the Pareto-optimality issue in the cross-efficiency evaluation by presenting a natural notion of Pareto-optimality in the cross-efficiency evaluation which is based on a new self-prioritizing principle and aligned with the concept of dominance. This Pareto-optimality notion is devised using less stringent postulates, compared to those used to devise the existing Pareto-optimality notions in the current literature. We then propose a multi-objective model whose Pareto-optimal solutions generate all the Pareto-optimal cross-efficiency scores sets that fulfill the self-prioritizing principle. It is shown that there is a Pareto-optimal solution to the proposed multi-objective programming model which assigns a common set of weights to all decision making units. We then propose a linear model to obtain such an optimal solution using the weighted sum technique, thereby we can determine an optimal weights profile to generate a set of Pareto-optimal cross-efficiency scores by solving only one linear model. Having started with less stringent postulates, we have more flexibility in enhancing cross-efficiency scores of decision making units and can hence provide a non-dominated set of cross-efficiency scores as illustrated by a real data example. We also demonstrate the possibility of better, compared to other cross-efficiency evaluation methods, resource allocation using another real data example.

Keywords: Data envelopment analysis; Cross-efficiency evaluation; Muti-objective programming; Pareto-optimal cross-efficiency scores (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (9)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ejores:v:288:y:2021:i:1:p:247-257

DOI: 10.1016/j.ejor.2020.05.040

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