A Hitchhiker’s guide to the techniques of adaptive nonlinear models

Adaptive nonlinear models (ANMs) are currently being proposed for use in actuarial and financial modeling. The techniques of these models included such things as neural networks and genetic algorithms. While there is a general awareness of the nature of these ANM techniques, there is often only vague familiarity with the details of how these techniques are implemented. This article is intended to help alleviate this situation. Its purpose is to present an overview of ANM techniques, which includes an explanation of what they are, how they work, and a description of their key features.