That’s beside the point. In the first case you’d take 1A in the first game, and 2A in the 2nd game(34% chance of living is better than 33%). In the 2nd case, if you bothered to play at all, you’d probably take 1B/2B. What doesn’t make sense is taking 1A and 2B. That policy is inconsistent no matter how you value different amounts of money (unless you don’t care about money at all in which case do whatever, the paradox is better illustrated with something you do care about) so things like risk, capital cost, diminishing returns etc are beside the point.
That’s beside the point. In the first case you’d take 1A in the first game, and 2A in the 2nd game(34% chance of living is better than 33%). In the 2nd case, if you bothered to play at all, you’d probably take 1B/2B. What doesn’t make sense is taking 1A and 2B. That policy is inconsistent no matter how you value different amounts of money (unless you don’t care about money at all in which case do whatever, the paradox is better illustrated with something you do care about) so things like risk, capital cost, diminishing returns etc are beside the point.