The Complexity Trap: Simple Observation Masking Is as Efficient as LLM Summarization for Agent Context Management

Large Language Model (LLM)-based agents solve complex tasks through iterative reasoning, exploration, and tool-use, a process that can result in long, expensive context histories. While state-of-the-art Software Engineering ( SE) agents like OpenHands or Cursor use LLM-based summarization to tackle this issue, it is unclear whether the increased complexity offers tangible performance benefits compared to simply omitting older observations. We present a systematic comparison of these strategies within SWE-agent on SWE-bench Verified across five diverse model configurations. We find that a simple observation-masking strategy halves cost relative to a raw agent while matching, and sometimes slightly exceeding, the solve rate of LLM summarization. For example, with Qwen3-Coder 480B, masking improves solve rate from 53.8% (raw agent) to 54.8%, while remaining competitive with summarization at a lower cost. These results suggest that, at least within SWE-agent on SWE-bench Verified, the most effective and efficient context management can be the simplest. We release code and data for reproducibility