It's also important to consider the developers risk tolerance as well. It's all fine and dandy that the project manager is okay with the risk but what if none of the developers are? Or one senior dev is okay with it but the 3 who actually work the on-call queue are not?

I don't get paid extra for after hours incidents (usually we just trade time), so it's well within my purview on when to take on extra risk. Obviously, this is not ideal, but I don't make the on-call rules and my ability to change them is not a factor.

I don't think of this as a project manager's role, but an engineering manager's role. The engineers on the team (especially the senior engineers) should be identifying the risks, and the engineering managers should be deciding whether they are tolerable. That includes risks like "the oncall is awful and morale collapses and everyone quits".

It's certainly the case that there are managers who handle those risks poorly, but that's just bad management.