Personally, I would take choice one in both sets. But I think loss aversion trivially explains the paradox. In set one choice two outcome two, I would feel like a big loser. In set two choice two outcome two, not really.

Just imagine being sad in a room of 97 happy and 2 other sad people (set 1 choice 2 outcome 2), wishing you were in another room full of happy people. Set 2 choice 2 does not have this repulsiveness, the two rooms (choices) are very similar.