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Cross-efficiency aggregation method based on prospect consensus process

Author

Listed:
  • Lei Chen

    (Fuzhou University)

  • Ying-Ming Wang

    (Fuzhou University
    Fuzhou University)

  • Yan Huang

    (Fuzhou University
    Fujian Agriculture and Forestry University)

Abstract

The arithmetic average method is usually adopted to aggregate cross-efficiency in traditional cross-efficiency methods. However, this method not only underestimates the importance of self-evaluation, but also ignores the subjective preference of decision-makers. This paper thus introduces prospect theory to describe the subjective preference of decision-makers in the aggregation process when they face gains and losses, then a new method is constructed to aggregate cross-efficiency. Based on the differences between the psychological expectations and aggregation results, the expectations are constantly adjusted until a consensus on aggregation results is reached. An aggregation result that is more acceptable to all decision-making units can then be obtained. Finally, the proposed method is applied to aggregate the cross-efficiency of 27 industrial robots to illustrate its effectiveness and convergence.

Suggested Citation

  • Lei Chen & Ying-Ming Wang & Yan Huang, 2020. "Cross-efficiency aggregation method based on prospect consensus process," Annals of Operations Research, Springer, vol. 288(1), pages 115-135, May.
    • Handle: RePEc:spr:annopr:v:288:y:2020:i:1:d:10.1007_s10479-019-03491-w
    DOI: 10.1007/s10479-019-03491-w
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    References listed on IDEAS

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    4. Feng Li & Han Wu & Qingyuan Zhu & Liang Liang & Gang Kou, 2021. "Data envelopment analysis cross efficiency evaluation with reciprocal behaviors," Annals of Operations Research, Springer, vol. 302(1), pages 173-210, July.

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