The second-to-last line of the proof is also very confusing. I think GPT-4 is using the same variable names to mean different variables, which leads it to say silly things like "the uniqueness of $y$ given $y$".

On further reflection I agree that diminishing return are pretty important. One consequence of them is that there is effectively a cap P on the total positive utility in a given time T. That turns into a risk cap of P/C per time period T.