The rules are in API 520/521. They do not directly specify if the valves should be on the smaller or larger diameter pipe, however API 521 limits the pressure loss from the vessel to the PSV to 3% of the set pressure in psig (not psia). That is, if the PSV is set at 100 psig, then the maximum pressure loss due to friction from the vessel to the PSV should not exceed 3 psi. Also, the maximum allowable back pressure should not exceed 10% of the PSV set pressure.
I have always seen the valves on the larger diameter pipe and the reducers right at the PSV, but I have never had to choose based on economics. How much money is significant? $1000, $10,000 difference? Is this for a refinery? Refineries typically have deep pockets for safety. Unless it were a really significant percentage of the project, I would put the valve on the larger diameter pipe, I would place the reducers right at the PSV and I would forget about it.
In either case, do not forget to lock open or car seal open those manual valves.