Every MMO I've played either explicitly details caps, diminishing returns etc. or players test it and publish those details so they're either well known or easy to find.
Unfortunately I don't find your example item 1 at all clear. Modifying it slightly so we can work with it.
Item 1 has 100 damage, 30% chance to crit (for +10%)
Item 2 has 100 damage, 20% chance to crit (for +50%)
On average over 10 hits, item 1 would do:
100x10 + 3x(100x0.1) = 1030
On average over 10 hits, item 2 would do:
100x10 + 2x(100x0.5) = 1100
All other things being equal - i.e. we're not accounting for player based crit chance modifiers or modifiers from other equipment (which could also easily be factored into the equations) - item 2 is a clear winner.