Assessing the accuracy of efficiency rankings obtained from a stochastic frontier model

Ilya Nikolskiy () and Kirill Furmanov
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Ilya Nikolskiy: Lomonosov Moscow State University, Moscow, Russian Federation

Applied Econometrics, 2023, vol. 71, 128-142

Abstract: A technique for assessing the concordance between true inefficiency of decision making units in a basic stochastic frontier model and their JLMS estimates is proposed. An approximate formula for Harrell’s C-index is derived for the case of half-normal distribution of inefficiency component. A simulation study shows that the approximation error is about 0.01 and that finite-sample values of Harrell’s C are lower than asymptotic values. Hence, the approximate formula may be considered as an upper bound for the ranking accuracy of the stochastic frontier model

Keywords: stochastic frontier; ranking; technical efficiency (search for similar items in EconPapers)
JEL-codes: C20 (search for similar items in EconPapers)
Date: 2023
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