The argument (outlined in more detail in appendix A) by which Modigliani and Miller sought to sweep aside such behavioral and institutional issues was as follows. Suppose that two investments are "perfect substitutes" (Modigliani and Miller 1959, p. 656), in other words that they are entitlements to identical income streams. If the prices of the two investments are not the same, then any holder of the dearer investment can benefit by selling it and buying the cheaper. Nothing need be assumed about investors' willingness to take on risk, or about any "psychological" or "institutional" matters, other than that "investors always prefer more wealth to less" (Miller and Modigliani 1961, p. 412). "The exchange" of the dearer investment for the cheaper, Modigliani and Miller wrote, would be "advantageous to the investor quite independently of his attitudes to risk" (1958, p. 269).

Donald MacKenzie, An Engine, Not a Camera, loc. 180