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In my head, I associate the word with reluctantly and being the bigger person.

An example where the word would be appropriate to use is: I let the little kid play with my phone even though I saw him put his fingers in his mouth, and I am a slight germaphobe because, in my heart, I know it is the better decision to let the kid do their thing than follow my selfish wants and take my phone away, causing the kid to create a scene making everything more difficult.

The word isn't like capitulate because I am not conceding to someone's demands. It is more along the lines of doing something (generally for the greater good) even though I do not want to, but by my own choice. It is like feeling reluctant but having agency in the choice made.

I forgot to add, but this theoretical word in my head isn't too negative. I mentioned it before, but I think capitulate has slightly too much of a negative and forceful connotation.

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Your approach could be called pragmatic. Per Collins Dictionary:

A pragmatic way of dealing with something is based on practical considerations, rather than theoretical ones. A pragmatic person deals with things in a practical way.

Robin took a pragmatic look at her situation.

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Perhaps "concede" or "tolerate" would do the job.

M-W gives for concede:

1 a (1) : to acknowledge grudgingly or hesitantly conceded that it might be a good idea
(2) : to relinquish grudgingly or hesitantly concede power
b : to accept as true, valid, or accurate The right of the state to tax is generally conceded.
2 : to grant as a right or privilege Britain conceded the independence of the colonies.

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The behavior you describe could be acting conscionably or in a conscionable manner or making the conscionable choice. Per Collins Dictionary: conscionably: in a manner that is acceptable to one's conscience.

To make the magnanimous choice or to show magnanimity is another way to describe being generous of spirit/tolerant or doing the right thing. Per Merriam Webster: The school whose lunch debt was paid by a magnanimous nine-year-old? — Kiran Misra, The New Republic, 12 Feb. 2021

Two idioms that might be apt are take the high road and grin and bear it.

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