DEA game cross-efficiency approach to Olympic rankings

A number of studies have used data envelopment analysis (DEA) to evaluate the performance of the countries in Olympic games. While competition exists among the Countries in Olympic games/rankings, all these DEA studies do not model competition among peer decision making units (DMUs) or countries. These IDEA studies find a set of weights/multipliers that keep the efficiency scores of all DMUs at or below unity. Although cross efficiency goes a further step by providing an efficiency measure in terms of the best multiplier bundle for the unit and all the other DMUs, it is not always unique. This paper presents a new and modified DEA game cross-efficiency model where each DMU is viewed as a competitor via non-cooperative game. For each competing DMU, a multiplier bundle is determined that optimizes the efficiency score for that DMU, with the additional constraint that the resulting score should be at or above that DMU's estimated best performance. The problem, of course, arises that we will not know this best performance score for the DMU Under evaluation until the best performances of all other DMUs are known. To combat this "chicken and egg" phenomenon, an iterative approach leading to the Nash equilibrium is presented. The Current paper provides a modified variable returns to scale (VRS) model that yields non-negative cross-efficiency scores. The approach is applied to the last six Summer Olympic Games. Our results may indicate that our game cross-efficiency model implicitly incorporates the relative importance of gold, silver and bronze medals without the need for specifying the exact assurance regions. (C) 2008 Elsevier Ltd. All rights reserved.