What's the smart bet?

Every choice is a gamble with the odds attached. List what each option could lead to — the chance of each result and its payoffThe payoff: what an outcome is worth if it happens. It can be a gain or, written negative, a loss. — and this folds the branches of the decision treeA decision tree: each option fans out into its possible outcomes, each with a probability and a payoff. Folding it collapses all the branches into one comparable number. into one number: the expected valueExpected value (EV): each outcome's probability times its payoff, summed. The average result if you faced the same bet many times — not a promise on any single one.. The option with the highest EV is the bet that pays off on average.

Build in-houseBuild in-house has the highest expected value at €42k, €12k ahead of Buy a vendor.
Build in-house
€42k
Buy a vendor
€30k
€42kEV
%
= €72k
%
= −€30k
100%
€30kEV
%
= €36k
%
= −€6k
100%
expected value sums probability × payoff across every branch · it's the smart call over many bets, not a promise on any single one