You are right, theory is overrated. Just because you don't have a theoretical justification for commencing an action doesn't mean that the action isn't the right action to take if you want to try to "win." Of course, it is very possible to be in a situation where "winning" is inherently impossible, in which case you could still (rationally) attempt various strategies that seem likely to make you better off than you would otherwise be...
As a practicing attorney, I've frequently encountered real-life problems similar to the above. For example, in a negotiation on behalf of a client, there is often what's called a "bargaining zone" that represents a range of options for possible "deals" that both parties are theoretically willing to accept. Any given "deal" would be Pareto Efficient, and any "deal" within the "bargaining zone," if it takes place, would make both parties to the negotiation better off than they were before. However, it is possible to strike a superior deal for your client if you are more aggressive and push the terms into the "upper" range of the bargaining zone. On the other hand, you don't typically know the extent of the "bargaining zone" before you begin negotiations. If you are TOO aggressive and push outside of the range of the other party's acceptable options, the other party/counsel might get frustrated with you and call off the negotiations entirely, in which case you will lose the deal for everyone and make your client angry with you.
To the extent "winning" is possible here, the strategy for attorneys on both sides is to push the terms of the "deal" as close as possible to the "edge" of what the other will accept without pushing too far and getting the talks called off. Although there are reasonable strategies to the process, very often there isn't a theoretical "optimally rational strategy" for "winning" a negotiation -- you just have to play the game and make your strategic decisions based on new information as it becomes available.
The chart is flawed -- it doesn't contain numbers predating the Industrial Revolution, when many of the agricultural workers who lived off the land tended to be much happier than the overworked, depressed populations of today. What's the point of "productivity" if you don't have the free time to enjoy the fruits of your labor? Our current system is designed to benefit the people at the top, regardless of how much the exploited lower and middle class workers are paid.