The Simar and Wilsons bootstrap DEA approach: a critique

The Simar and Wilsons bootstrap DEA approach: a critique
Document type
Working Paper
Tziogkidis, Panagiotis
Cardiff Business School
Date of publication
5 November 2012
Trends: economic, social and technology trends affecting business
Business and management
Material type

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This paper provides a critique on certain aspects of Simar and Wilson's methodologies on bootstrap data envelopment analysis (DEA). In particular, the author argues that the bootstrap bias has a completely different nature compared to the DEA bias. This poses a question about the validity of the twice 'bias-corrected' efficiency scores of Simar and Wilson (1998) as well as about the consistency of Simar and Wilson's (2000) confidence intervals which both use this assumption. Moreover, the paper examines the extent to which the complicated procedure of smoothing the empirical distribution is necessary, and provides evidence by performing an extensive Monte Carlo experiment over three different populations and three different model dimensions. The paper follows an approach of moment comparison which has not been used in previous studies as the less reliable 'coverage probabilities' have been used instead. The results offer a deep insight on the workings of bootstrap DEA, while they confirm the author's arguments and suggest that the practice of smoothing the empirical distribution should be avoided.

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