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

Author

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  • Nikolskiy, Ilya

    (Lomonosov Moscow State University, Moscow, Russian Federation)

  • Furmanov, Kirill

    (Central Economics and Mathematics Institute, RAS, Moscow, Russian Federation)

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

Suggested Citation

  • Nikolskiy, Ilya & Furmanov, Kirill, 2023. "Assessing the accuracy of efficiency rankings obtained from a stochastic frontier model," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 71, pages 128-142.
  • Handle: RePEc:ris:apltrx:0481
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    References listed on IDEAS

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    More about this item

    Keywords

    stochastic frontier; ranking; technical efficiency;
    All these keywords.

    JEL classification:

    • C20 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - General

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