Sampling size and efficiency bias in data envelopment analysis

Author:

Alirezaee Mohammad R.1,Howland Murray2,van de Panne Cornelis2

Affiliation:

1. University of Calgary and Teacher Training University, Canada

2. University of Calgary, Canada

Abstract

In Data Envelopment Analysis, when the number of decision making units is small, the number of units of the dominant or effcient set is relatively large and the average effciency is generally high. The high average effciency is the result of assuming that the units in the effcient set are 100% effcient. If this assumption is not valid, this results in an overestimation of the efficiencies, which will be larger for a smaller number of units. Samples of various sizes are used to find the related bias in the effciency estimation. The samples are drawn from a large scale application of DEA to bank branch efficiency. The effects of different assumptions as to returns to scale and the number of inputs and outputs are investigated.

Publisher

Hindawi Limited

Subject

Applied Mathematics,Computational Mathematics,Statistics and Probability,General Decision Sciences

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