Abstract
A technique for assessing the concordance between true inefficiency of decision making units in a basic stochastic frontier model and their JLMS estimates is proposed. An approximate formula for Harrell’s C‐index is derived for the case of half‐normal distribution of inefficiency component. A simulation study shows that the approximation error is about 0.01 and that finite‐sample values of Harrell’s C are lower than asymptotic values. Hence, the approximate formula may be considered as an upper bound for the ranking accuracy of the stochastic frontier model.
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