There are 2 things to consider: What would be the energy difference between before and after rearrangement from initial $2^\circ$-carbocation (I) and each of rearranged carbocations II and III:

It is obvious that the rearrangement of carbocation I to give carbocation II by ring expansion have minimal energy change since both initial and final carbocations are $2^\circ$ and ring expansion does not relieve too much energy because it is cyclopentyl to cyclohexyl. However, the rearrangement of carbocation I to give carbocation III by 1,2-hydride transfer relieves good amount of energy since initial carbocation is $2^\circ$ and final rearranged carbocation is $3^\circ$. Although the carbocation II would undergo further stabilization by 1,2-hydride transfer to relieve extra energy, I to III happens much faster than I to II transfer to give 3 as the major product.