Measuring Team Efficiency
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In this chapter we discuss the limitation of the standard DEA models in estimating team and manager inefficiency. If all teams are efficient, the standard assumptions of the production frontier hold. However, if managerial inefficiency causes a team to lose a game that should have been won, another team wins a game that should have been lost. As a result, the departure from the frontier due to inefficiency leads to upward-biased estimates of the frontier and hence, downwardly biased efficiency estimates. Lins et al. (2003) first discussed this issue with respect to zero-sum gains in an analysis of the Olympic games. Collier et al. (2010b) provided a linear programming model to achieve the same correction.