Modigliani himself distrusted the theorem he co-authored, doubting its assumptions of perfect markets

Evidence

Having shown the irrelevance of capital structure and of dividend policy in their simple assumed world, Modigliani and Miller then investigated the consequences of allowing some more realism (especially in regard to taxes) back in. Just how far to go in adjusting their model to “reality” and the exact consequences of doing so became matters of dispute between Modigliani and Miller. Attuned, as Keynes had been, to the imperfections of markets, Modigliani was the more cautious. Indeed, when first describing the irrelevance of capital structure to a class at Carnegie Tech, he distanced himself: “I announced the theorem and said `I don’t believe it.”’ (Modigliani interview) Miller, in contrast, was prepared more radically to set aside the question of the validity of assumptions, in the manner advocated by Friedman (Miller interview). — Donald MacKenzie, An Engine, Not a Camera, 187

Categorization

• QUESTION: Modigliani’s ‘I don’t believe it’ is a striking anti-performative moment — a co-author who doubted his own result at the moment of announcement. Worth tracing how this doubt squared with the theorem’s later uptake by finance practice.
• CANDY: The co-author of the irrelevance theorem told his own class he didn’t believe it — a genuinely fun anecdote that also carries real theoretical weight.
• XREF: connects to: Even the efficient-market theory’s own authors doubted full strong-form efficiency. — Donald MacKenzie, An Engine, Not a Camera: How Financial…, 295; Early critics rejected Modigliani-Miller for lacking any empirical grounding — Donald MacKenzie, An Engine, Not a Camera: How Financial…, 195

Broader Connections

• Even the efficient-market theory’s own authors doubted full strong-form efficiency. #contradicts (0.85) — Donald MacKenzie, An Engine, Not a Camera, 295
• Early critics rejected Modigliani-Miller for lacking any empirical grounding #expands (0.80) — Donald MacKenzie, An Engine, Not a Camera, 195