A test of the Modigliani-Miller theorem, dividend policy and algorithmic arbitrage in experimental asset markets

Modigliani and Miller showed that the market value of company is in- dependent its capital structure, suggested dividend policy makes no dierence to this law one price. We experimentally test MM theorem in a complete with two simultaneously traded assets, employing experimental treatment variations. The first variation involves stream. According payout order either identi- cal or independent. second participation, not, an algorithmic arbitrageur. find Modigliani-Miller's price can be supported on average without arbitrageur when dividends are identical. breaks down independent unless keeps asset prices balance.