This paper provides a microfoundation for distributions of technical inefficiency in parametric stochastic production frontier analysis. It shows that dial-setting technology à la Jovanovic and Nyarko (1996) implies a gamma distribution with a specific set of parameters that depends on a manager's experience or his/her prediction ability.
- Gamma distribution
- Stochastic frontier production function
ASJC Scopus subject areas
- Economics and Econometrics