publication . Article . Other literature type . 1993

Maximum likelihood, consistency and data envelopment analysis: a statistical foundation

Banker, Rajiv D.;
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  • Published: 01 Oct 1993 Journal: Management Science, volume 39, pages 1,265-1,273 (issn: 0025-1909, eissn: 1526-5501, Copyright policy)
  • Publisher: Institute for Operations Research and the Management Sciences (INFORMS)
Abstract
This paper provides a formal statistical basis for the efficiency evaluation techniques of data envelopment analysis (DEA). DEA estimators of the best practice monotone increasing and concave production function are shown to be also maximum likelihood estimators if the deviation of actual output from the efficient output is regarded as a stochastic variable with a monotone decreasing probability density function. While the best practice frontier estimator is biased below the theoretical frontier for a finite sample size, the bias approaches zero for large samples. The DEA estimators exhibit the desirable asymptotic property of consistency, and the asymptotic dis...
Subjects
free text keywords: data envelopment analysis, production frontier, nonparametric estimation, maximum likelihood estimates, consistency, hypothesis tests, Management Science and Operations Research, Strategy and Management, Probability density function, Asymptotic distribution, Mathematical optimization, M-estimator, Estimator, Data envelopment analysis, Statistics, Asymptotic theory (statistics), Consistent estimator, Random variable, Econometrics, Mathematics
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