Volume 53, Number 3, July-September 2019
|Page(s)||749 - 765|
|Published online||14 June 2019|
DEA models for two decision makers with conflicts: the principal-agent problem
School of Business, Nanjing Audit University, Nanjing, Jiangsu Province 211815, P.R. China
2 School of Management, University of Science and Technology of China, Hefei, Anhui Province 230026, P.R. China
* Corresponding author: email@example.com
Accepted: 19 June 2018
This paper studies the impact of two decision makers’ interaction with conflicts on the efficiencies of the system. We start with a general principal-agent framework where the principal and the agent make decisions independently and the principal has a contradictive objective to that of the agent. We develop data envelopment analysis (DEA) models in the principal’s and the agent’s perspectives respectively. Non-cooperation between the principal and the agent is discussed to illustrate how one decision maker affects the other and the corresponding efficiency and incentive contract of the system. In addition, cooperation of the two parties is also analyzed to better derive how the performance of the system is influenced by the parties and their interactions as well. Then, this study illustrates the proposed models and effective incentive contracts by applying them to the efficiency evaluations of 22 China listed electric power companies.
Mathematics Subject Classification: 90B030
Key words: Data envelopment analysis / two decision makers / conflict / principal-agent problem
© EDP Sciences, ROADEF, SMAI 2019
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