Achieving MAX-MIN Fair Cross-efficiency scores in Data Envelopment Analysis

Abstract

Algorithmic decision making is gaining popularity in today’s business. The need for fast, accurate, and complex decisions forces decision-makers to take advantage of algorithms. However, algorithms can create unwanted bias or undesired consequences that can be averted. In this paper, we propose a MAX-MIN fair cross-efficiency data envelopment analysis (DEA) model that solves the problem of high variance cross-efficiency scores. The MAX-MIN cross-efficiency procedure is in accordance with John Rawls’s Theory of justice by allowing efficiency and cross-efficiency estimation such that the greatest benefit of the least-advantaged decision making unit is achieved. The proposed mathematical model is tested on a healthcare related dataset. The results suggest that the proposed method solves several issues of cross-efficiency scores. First, it enables full rankings by having the ability to discriminate between the efficiency scores of DMUs. Second, the variance of cross-efficiency scores is reduced, and finally, fairness is introduced through optimization of the minimal efficiency scores.

Sandro Radovanović

Assistant Professor at University of Belgrade

My research interests include machine learning, development and design of decision support systems, decision theory, and fairness and justice concepts in algorithmic decision making.