Netanyahu rejecting the offer outright leads to more death and violence in the short and long term.
Just the short term really. The least deaths in the long term from a game theory perspective is to make the value of the hostages zero or even negative.
Israel’s biggest mistake in the hostage back and forth was in the past giving up like 1000 fighters for some hostages.
Instead Israel should occupy like an additional acre of Palestine everytime a hostage/day is taken. Domestically the loss of territory seems to be the only thing that matters to Palestinians, in terms of political support. So they need to take that away.