Multi-objective data envelopment analysis: A game of multiple attribute decision-making

Chen Yuh Wen ()
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Chen Yuh Wen: Institute of Industrial Engineering and Management, College of Engineering, Da-Yeh University, Chang Hwa, Taiwan

Journal of Economics and Management, 2019, vol. 37, issue 3, 156-177

Abstract: Aim/purpose ‒ The traditional data envelopment analysis (DEA) is popularly used to evaluate the relative efficiency among public or private firms by maximising each firm’s efficiency: the decision maker only considers one decision-making unit (DMU) at one time; thus, if there are n firms for computing efficiency scores, the resolution of n similar problems is necessary. Therefore, the multi-objective linear programming (MOLP) problem is used to simplify the complexity. Design/methodology/approach ‒ According to the similarity between the DEA and the multiple attribute decision making (MADM), a game of MADM is proposed to solve the DEA problem. Related definitions and proofs are provided to clarify this particular approach. Findings ‒ The multi-objective DEA is validated to be a unique MADM problem in this study: the MADM game for DEA is eventually identical to the weighting multi-objective DEA. This MADM game for DEA is used to rank ten LCD companies in Taiwan for their research and development (R&D) efficiencies to show its practical application. Research implications/limitations ‒ The main advantage of using an MADM game on the weighting multi-objective DEA is that the decision maker does not need to worry how to set these weights among DMUs/objectives, this MADM game will decide the weights among DMUs by the game theory. However, various DEA models are eventually evaluation tools. No one can guarantee us with 100% confidence that their evaluated results of DEA could be the absolute standard. Readers should analyse the results with care. Originality/value/contribution ‒ A unique link between the multi-objective CCR DEA and the MADM game for DEA is established and validated in this study. Previous scholars seldom explored and developed this breathtaking view before.

Keywords: Multi-Objective Linear Programming (MOLP); Data Envelopment Analysis (DEA); Multiple Attribute Decision Making (MADM); Research and Development (R&D) efficiency (search for similar items in EconPapers)
JEL-codes: C44 C57 (search for similar items in EconPapers)
Date: 2019
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Persistent link: https://EconPapers.repec.org/RePEc:vrs:jecman:v:37:y:2019:i:3:p:156-177:n:6

DOI: 10.22367/jem.2019.37.08

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