Keep it simple, stupid

Do you prefer sophistication or simplicity? Neil Palmer takes a look at optimisation methods in energy modelling and asks if energy quants aren’t sometimes being a little too heavy-handed

Are you driven by accuracy or elegance – the fine detail, or the broad brush? And when you’re modelling energy prices or assets, would you throw in a few price-spikes here or a fancy regime-switch there? Or do you plump for a nice pretty formula every time?

Most quants aspire to both approaches. Energy trading houses know that more accurate and detailed models will give them an edge in the market. But they also know that more complicated models are often just more cumbersome, slower to run