IDEAS home Printed from https://ideas.repec.org/p/haf/huedwp/wp201114.html

Inefficiency

Author

Abstract

We introduce an ordinal model of efficiency measurement. Our primitive is a notion of efficiency that is comparative, but not cardinal or absolute. In this framework, we postulate axioms that we believe an ordinal efficiency measure should satisfy. Primary among these are choice consistency and planning consistency, which guide the measurement of efficiency in a firm with access to multiple technologies. Other axioms include symmetry, which states that the names of commodities do not matter, scale-invariance, which says that units of measurement of commodities does not matter, and strong monotonicity, which states that efficiency should decrease if the inputs and outputs remain static when the technology becomes unambiguously more efficient. These axioms characterize a unique ordinal efficiency measure which is represented by the coefficient of resource utilization. By replacing symmetry (the weakest of our axioms) with a very mild continuity condition, we obtain a family of path-based measures.

Suggested Citation

  • Chambers, Christopher P. & Miller, Alan D., "undated". "Inefficiency," Working Papers WP2011/14, University of Haifa, Department of Economics, revised 30 Nov 2011.
    • Handle: RePEc:haf:huedwp:wp201114
    as

    Download full text from publisher

    File URL: http://hevra.haifa.ac.il/econ/wp_files/wp201114.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. R. Russell & William Schworm, 2009. "Axiomatic foundations of efficiency measurement on data-generated technologies," Journal of Productivity Analysis, Springer, vol. 31(2), pages 77-86, April.
    2. Bruno Leclerc & Bernard Monjardet, 2010. "Aggregation and residuation," Post-Print halshs-00504982, HAL.
    3. Kalai, Ehud, 1977. "Proportional Solutions to Bargaining Situations: Interpersonal Utility Comparisons," Econometrica, Econometric Society, vol. 45(7), pages 1623-1630, October.
    4. R. Russell & William Schworm, 2011. "Properties of inefficiency indexes on 〈input, output〉 space," Journal of Productivity Analysis, Springer, vol. 36(2), pages 143-156, October.
    5. Nash, John, 1950. "The Bargaining Problem," Econometrica, Econometric Society, vol. 18(2), pages 155-162, April.
    6. Aly, Hassan Y, 1990. "Technical, Scale, and Allocative Efficiencies in U.S. Banking: An Empirical Investigation," The Review of Economics and Statistics, MIT Press, vol. 72(2), pages 211-218, May.
    7. Nishimizu, Mieko & Page, John M, Jr, 1982. "Total Factor Productivity Growth, Technological Progress and Technical Efficiency Change: Dimensions of Productivity Change in Yugoslavia, 1965-78," Economic Journal, Royal Economic Society, vol. 92(368), pages 920-936, December.
    8. Christopher Chambers & Alan Miller, 2011. "Rules for aggregating information," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 36(1), pages 75-82, January.
    9. Miller, Alan D., 2008. "Group identification," Games and Economic Behavior, Elsevier, vol. 63(1), pages 188-202, May.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Ilya Segal & Susan Athey, 2007. "Designing Efficient Mechanisms for Dynamic Bilateral Trading Games," American Economic Review, American Economic Association, vol. 97(2), pages 131-136, May.
    2. Panayotis Constantinou & Jonathan Sicsic & Carine Franc, 2017. "Effect of pay-for-performance on cervical cancer screening participation in France," International Journal of Health Economics and Management, Springer, vol. 17(2), pages 181-201, June.
    3. Olszewski, Wojciech & Safronov, Mikhail, 2018. "Efficient cooperation by exchanging favors," Theoretical Economics, Econometric Society, vol. 13(3), September.
    4. Hala Gabr Mahmoud, 2017. "The Effect of Cooperative Learning Strategy on Undergraduate Nursing Students Enrolled in Nursing Administration Course," International Journal of Learning and Development, Macrothink Institute, vol. 7(1), pages 26-40, March.
    5. Chambers, Robert G. & Hailu, Atakelty & Quiggin, John, 2011. "Event-specific data envelopment models and efficiency analysis," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 55(01), pages 1-17.
    6. Gina Lopez & Hannah Beate Kolem & Amit Kumar Srivastava & Thomas Gaiser & Frank Ewert, 2019. "A Model-Based Estimation of Resource Use Efficiencies in Maize Production in Nigeria," Sustainability, MDPI, vol. 11(18), pages 1-19, September.
    7. Marshall, Elizabeth & Aillery, Marcel & Ribaudo, Marc & Key, Nigel & Sneeringer, Stacy & Hansen, LeRoy & Malcolm, Scott & Riddle, Anne, 2018. "Reducing Nutrient Losses From Cropland in the Mississippi/Atchafalaya River Basin: Cost Efficiency and Regional Distribution," Economic Research Report 277567, United States Department of Agriculture, Economic Research Service.
    8. Marie-Laure Djelic & Joel Bothello, 2013. "Limited liability and its moral hazard implications: the systemic inscription of instability in contemporary capitalism," Post-Print hal-01891963, HAL.
    9. Marc Fleurbaey & François Maniquet, 2019. "Well-being measurement with non-classical goods," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 68(3), pages 765-786, October.
    10. Berger, Allen N., 2003. "The efficiency effects of a single market for financial services in Europe," European Journal of Operational Research, Elsevier, vol. 150(3), pages 466-481, November.
    11. repec:spo:wpmain:info:hdl:2441/153e5es3a8988omf0qkf000ql2 is not listed on IDEAS
    12. Grailey, K. E. & Murray, E. & Reader, T. & Brett, S. J., 2021. "The presence and potential impact of psychological safety in the healthcare setting: an evidence synthesis," LSE Research Online Documents on Economics 111806, London School of Economics and Political Science, LSE Library.
    13. Bannor, Frank & Dikgang, Johane & Kutela Gelo, Dambala, 2021. "Interdependence between research and development, climate variability and agricultural production: evidence from sub-Saharan Africa," MPRA Paper 105697, University Library of Munich, Germany.
    14. David Adamson & Thilak Mallawaarachchi & John Quiggin, 2007. "Water use and salinity in the Murray-Darling Basin: A state-contingent model ," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 51(3), pages 263-281, September.
    15. Serra, Teresa & Chambers, Robert G. & Oude Lansink, Alfons, 2014. "Measuring technical and environmental efficiency in a state-contingent technology," European Journal of Operational Research, Elsevier, vol. 236(2), pages 706-717.
    16. Chambers, Christopher P. & Miller, Alan D., 2014. "Scholarly influence," Journal of Economic Theory, Elsevier, vol. 151(C), pages 571-583.
    17. Ruhul A. Salim & Nazrul Islam, 2010. "Exploring the impact of R&D and climate change on agricultural productivity growth: the case of Western Australia ," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 54(4), pages 561-582, October.
    18. Skevas, Theodoros & Lansink, Alfons Oude & Stefanou, Spiro E., 2012. "Measuring technical efficiency in the presence of pesticide spillovers and production uncertainty: The case of Dutch arable farms," European Journal of Operational Research, Elsevier, vol. 223(2), pages 550-559.
    19. Hughes, Neal & Lawson, Kenton & Davidson, Alistair & Jackson, Tom & Sheng, Yu, 2011. "Productivity pathways: climate-adjusted production frontiers for the Australian broadacre cropping industry," 2011 Conference (55th), February 8-11, 2011, Melbourne, Australia 100563, Australian Agricultural and Resource Economics Society.
    20. Mette Asmild & Tomas Baležentis & Jens Leth Hougaard, 2016. "Multi-directional productivity change: MEA-Malmquist," Journal of Productivity Analysis, Springer, vol. 46(2), pages 109-119, December.
    21. Robert Chambers & John Quiggin, 2007. "Information value and efficiency measurement for risk-averse firms," Journal of Productivity Analysis, Springer, vol. 27(3), pages 197-208, June.
    22. Dawon Baik & Brenda Zierler, 2019. "Clinical nurses’ experiences and perceptions after the implementation of an interprofessional team intervention: A qualitative study," Journal of Clinical Nursing, John Wiley & Sons, vol. 28(3-4), pages 430-443, February.
    23. Genevieve Beaird & Marianne Baernholdt & Kenneth R. White, 2020. "Perceptions of interdisciplinary rounding practices," Journal of Clinical Nursing, John Wiley & Sons, vol. 29(7-8), pages 1141-1150, April.
    24. Hamish Andrew Miller & Jacopo Ruggeri & Andrea Marchionni & Marco Bellini & Maria Vincenza Pagliaro & Carlo Bartoli & Andrea Pucci & Elisa Passaglia & Francesco Vizza, 2018. "Improving the Energy Efficiency of Direct Formate Fuel Cells with a Pd/C-CeO 2 Anode Catalyst and Anion Exchange Ionomer in the Catalyst Layer," Energies, MDPI, vol. 11(2), pages 1-12, February.
    25. Kichol Noh & Changhee Lee, 2021. "Development of an Ignition System and Assessment of Engine Performance and Exhaust Characteristics of a Marine Gas Engine," Sustainability, MDPI, vol. 13(8), pages 1-16, April.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Christopher P. Chambers & Alan D. Miller, 2014. "Inefficiency Measurement," American Economic Journal: Microeconomics, American Economic Association, vol. 6(2), pages 79-92, May.
    2. Chambers, Christopher P. & Miller, Alan D., 2018. "Benchmarking," Theoretical Economics, Econometric Society, vol. 13(2), May.
    3. Chambers, Christopher P. & Miller, Alan D., 2014. "Scholarly influence," Journal of Economic Theory, Elsevier, vol. 151(C), pages 571-583.
    4. Kristiaan Kerstens & Jafar Sadeghi & Ignace Van de Woestyne, 2020. "Plant capacity notions in a non-parametric framework: a brief review and new graph or non-oriented plant capacities," Annals of Operations Research, Springer, vol. 288(2), pages 837-860, May.
    5. Yoshihara, Naoki, 2003. "Characterizations of bargaining solutions in production economies with unequal skills," Journal of Economic Theory, Elsevier, vol. 108(2), pages 256-285, February.
    6. Wulf Gaertner & Richard Bradley & Yongsheng Xu & Lars Schwettmann, 2019. "Against the proportionality principle: Experimental findings on bargaining over losses," PLOS ONE, Public Library of Science, vol. 14(7), pages 1-18, July.
    7. Lea Melnikovová, 2017. "Can Game Theory Help to Mitigate Water Conflicts in the Syrdarya Basin?," Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis, Mendel University Press, vol. 65(4), pages 1393-1401.
    8. Daniele Cassese & Paolo Pin, 2025. "Decentralized pure exchange processes on networks," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 64(3), pages 427-463, May.
    9. , P. & ,, 2014. "On the consistency of data with bargaining theories," Theoretical Economics, Econometric Society, vol. 9(1), January.
    10. José-Manuel Giménez-Gómez & António Osório & Josep E. Peris, 2015. "From Bargaining Solutions to Claims Rules: A Proportional Approach," Games, MDPI, vol. 6(1), pages 1-7, March.
    11. Walter Briec & Laurent Cavaignac & Kristiaan Kerstens, 2020. "Input Efficiency Measures: A Generalized, Encompassing Formulation," Operations Research, INFORMS, vol. 68(6), pages 1836-1849, November.
    12. de Clippel, Geoffroy & Pérez-Castrillo, David & Wettstein, David, 2012. "Egalitarian equivalence under asymmetric information," Games and Economic Behavior, Elsevier, vol. 75(1), pages 413-423.
    13. Takeuchi, Ai & Veszteg, Róbert F. & Kamijo, Yoshio & Funaki, Yukihiko, 2022. "Bargaining over a jointly produced pie: The effect of the production function on bargaining outcomes," Games and Economic Behavior, Elsevier, vol. 134(C), pages 169-198.
    14. Ismail Saglam, 2020. "Bargaining over collusion: the threat of supply function versus Cournot competition under demand uncertainty and cost asymmetry," The Japanese Economic Review, Springer, vol. 71(4), pages 671-693, October.
    15. Naeve-Steinweg, Elisabeth, 2002. "Mechanisms supporting the Kalai-Smorodinsky solution," Mathematical Social Sciences, Elsevier, vol. 44(1), pages 25-36, September.
    16. Chambers, Robert G., 2024. "Numeraire choice, shadow profit, and inefficiency measurement," European Journal of Operational Research, Elsevier, vol. 319(2), pages 658-668.
    17. Hwang, Sung-Ha & Rey-Bellet, Luc, 2021. "Positive feedback in coordination games: Stochastic evolutionary dynamics and the logit choice rule," Games and Economic Behavior, Elsevier, vol. 126(C), pages 355-373.
    18. Saglam, Ismail, 2016. "An Alternative Characterization for Iterated Kalai-Smorodinsky-Nash Compromise," MPRA Paper 73564, University Library of Munich, Germany.
    19. R. Robert Russell & William Schworm, 2018. "Technological inefficiency indexes: a binary taxonomy and a generic theorem," Journal of Productivity Analysis, Springer, vol. 49(1), pages 17-23, February.
    20. van Damme, Eric & Lang, Xu, 2025. "Two-person bargaining when the disagreement point is private information," Games and Economic Behavior, Elsevier, vol. 150(C), pages 387-400.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;
    ;

    JEL classification:

    • C43 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Index Numbers and Aggregation
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:haf:huedwp:wp201114. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Anna Rubinchik (email available below). General contact details of provider: https://edirc.repec.org/data/dehaiil.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.