This psychological warfare was lost by Yang Yi because Kant had more chips and his skills were very adept. He was definitely not the kind of person who would play a strong hand poorly. On the contrary, Kant was really good at using his resources, and he could indeed turn things around in desperate situations and regain control.
But Yang Yi had the power to overturn the table; he could use a knife to make Kant completely shut up.
When a scholar meets a soldier, reasoning seems futile. It's not that soldiers are better at arguing than scholars, but that soldiers have the ability to make scholars shut up.
So Kant's suggestion made sense. He offered what seemed like the most reasonable solution, but Yang Yi chose not to listen because Yang Yi could never hand over the initiative he had gained.
