As was noted above, Black had been a close colleague of the Capital Asset Pricing Model's co-developer, Jack Treynor. Scholes had done his graduate work at the University of Chicago, where in the 1960s and the early 1970s the model was seen as an exemplary contribution to the field. (The "Chicago" criticism of the model discussed in chapter 4 was a later development.) However, at the other main site of financial economics, MIT, the original version of the Capital Asset Pricing Model was regarded much less positively. The model had been developed using a "mean-variance" view of portfolio selection: investors were modeled as guided only by the expected value or mean of the returns on investments, and by investments' risks as measured by the expected standard deviation or variance of their returns.

Donald MacKenzie, An Engine, Not a Camera, loc. 587