Probability theoretic "better" is intransitive. See non-transitive dice
Imagine your life is a dice, and you have three options:
If we compare them: peace < adventure < lottery < peace, so I would deny transitivity.
You say the first throw has an expected value of 693,5 (=700•215/216 -700•1/216) QALY, but it is not precise. The first throw has has an expected value of 693,5 QALY if your policy is to stop after the first throw.
If you continue, then the QALY gained from these new people might decrease, because in the future there is a greater chance that this 10 new people disappear, therefore decreasing the value of creating them.