That's at best an argument against the political viability of iterated straw drawing due to general irrationality, not against the rationality of iterated straw drawing itself. The pilots are definitely worse of when everyone is sent to their death. If the pilots opinions don't matter sending them all to their death is the best option since it saves training costs. If a compromise acceptable to the pilots need to be found then iterated straw drawing is the best option for everyone for any possible mission count and any gived cadre size, provided the pilots can make the necessary precommitment. Command might possibly reject this compromise due to some pilots appearing to be freeloading, but would act irrationally in doing so.

Of course doing the straw drawing at an earlier stage and optimizing training for whether they are going to be sent to their death or not would be even more efficient, but that level of precommitment seems less psychologically plausible.