Context-dependent Data Envelopment Analysis

Abstract

Adding or deleting an inefficient DMU or a set of inefficient DMUs does not alter the efficiencies of the existing DMUs and the best-practice frontier. The inefficiency scores change only if the best-practice frontier is altered. i.e., the performance of DMUs depends only on the identified best-practice frontier. In contrast, researchers of the consumer choice theory point out that consumer choice is often influenced by the context. e.g., a circle appears large when surrounded by small circles and small when surrounded by larger ones. Similarly a product may appear attractive against a background of less attractive alternatives and unattractive when compared to more attractive alternatives.