The actual determinant here is whether or not you enjoy gambling.
Person A who regularly goes to a casino and bets 100 bucks on roulette for the fun of it will obviously go for bet 1. In addition to the expected 5 buck profit, they get the extra fun of gambling, making it a no-brainer. Similarly, bet 2 is a no brainer.
Person B who hates gambling and gets super upset when they lose will probably reject bet 1. The expected profit of 5 bucks is outweighed by the emotional cost of doing gambling, a thing they are upset by.
When it comes to bet 2, person B still hates gambling, but the expected profit is ridiculously high that it exceeds the emotional cost of gambling, so they take the bet.
Nobody is necessarily being actually irrational here, when you account for non-monetary costs.
The actual determinant here is whether or not you enjoy gambling.
Person A who regularly goes to a casino and bets 100 bucks on roulette for the fun of it will obviously go for bet 1. In addition to the expected 5 buck profit, they get the extra fun of gambling, making it a no-brainer. Similarly, bet 2 is a no brainer.
Person B who hates gambling and gets super upset when they lose will probably reject bet 1. The expected profit of 5 bucks is outweighed by the emotional cost of doing gambling, a thing they are upset by.
When it comes to bet 2, person B still hates gambling, but the expected profit is ridiculously high that it exceeds the emotional cost of gambling, so they take the bet.
Nobody is necessarily being actually irrational here, when you account for non-monetary costs.