The game sits somewhere in between those two extremes...
The player has freedom to explore and interact with the environment, but progression is still driven by discrete narrative events and choices rather than fully systemic gameplay.
Because of that, I’m leaning toward balancing around player agency:
- If an action is clearly optional or risky, the negative impact can be higher.
- If an event is required to progress, its effects should be softer or at least partially offset elsewhere.
I’m thinking of adjusting the balance per context, depending on how much control and information the player has at that moment...