When he says "we reason with him, he referring to Kenny, Not Larry. That's why right after you pick it Kenny says "Over my dead body" or something like that. You would be siding with Larry and reasoning with Kenny if Duck turned out to be bit. I also picked it thinking this meant reason with Larry, they should be more clear about this.
This is a problem with most games where you can pick your responses in conversations. There is never enough context in the options they give you. Ie. If you say Lily is the leader, thinking that you are backing her up you will be disappointed when Lee tacks on the part at then end about her losing control of you people. If I knew based on my options that that particular response was going to end with bad-mouthing Lily I wouldn't have said it. I notice once in a while they put brackets after the sentences too give further context, I just don't see why they don't that more often.