The article compares two models for pricing interest rate derivatives: the Libor Market Model and the Swap Market Model. The researchers used data on US caplets and swaptions to analyze how well these models predict prices of derivatives not used for calibration. They found that the Libor Market Models generally provide better predictions than the Swap Market Models. A one-factor Libor Market Model with mean-reversion gives a good fit, and adding a second factor only slightly improves pricing accuracy. Models that exactly match certain derivative prices are found to be overfitted. All models tested were statistically rejected, and pricing errors are linked to the shape of the interest rate term structure.