Decoding Efficiency in Construction: A Behavioral DEA Approach to BRICS Economies

Amidst the rapidly evolving global economic landscape, the BRICS nations (Brazil, Russia, India, China, and South Africa) have emerged as pivotal players, particularly in the construction sector, which serves as a cornerstone for their continued growth and development. This sector’s performance not only reflects the economic health of these nations but also their capacity for sustainable urban and infrastructural expansion. This study aims to provide a comprehensive evaluative analysis of the construction industry’s efficiency across the BRICS nations using the Bounded Rationality Data Envelopment Analysis (BR-DEA) model, incorporating principles from Prospect Theory. Moreover, this study also investigates the relationship between behavioral economics and operational efficiency within this sector. According to well-known prospect theory, the psychological behavioral coefficients applied in the model include the loss aversion, the gain preference, the gain curvature, and the loss curvature coefficients. Key performance indicators for the model were meticulously chosen, normalized, and derived from reputable global and national databases. The findings revealed that efficiency scores generally increased with higher gain preference coefficients across different loss aversion settings, indicating that valuing gains more positively is associated with greater efficiency. Variations were observed among the BRICS countries, suggesting that efficiency is influenced by country-specific behavioral factors. This study contributes to the literature by integrating behavioral economics into efficiency analysis and offers practical insights for policymakers and industry leaders within the BRICS nations. Limitations are acknowledged, primarily relating to data availability and the inherent complexities of behavioral modeling, which provide avenues for future research to expand upon these initial findings.