How do I apply Game Theory in my life

In the first lecture of my Game Theory class, the lecturer, a Harvard graduate, came to the class; and before introducing himself, said:

Assume that every one of you are the employees of the same company. The company is trying to create a product and you need to put some effort for that. You can select your effort level between 1–7, however your gain would be twice of the average of total effort regardless of your personal effort. How much effort would you be willing you put?

Maybe more than 100 people were taking the class. With a 2-minute thinking time, each of us wrote down a number on a piece of paper and passed it to him so that he can calculate the average and determine our gain.

He opened up his computer, shared his screen with us and started to put the numbers on an Excel sheet.

I’ve put 7 but I was expecting the average around 5 so we all could gain 10. In that case, I would have wasted 2 of my effort but it might be fair.

After he puts around 30 numbers, the average was 2 and it didn’t diverge much when he finished.

Even it was a game, I was feeling so foolish.

He said he does this every semester beginnings and the results are always close to 2. The reason is because the lack of trust. People didn’t want to spend effort because their gain depended on the average, and their effort has very small effect on that. Even though they all can win a lot, their potential loss was more important for the most.

After that, I decided I will never be part of a too-big group that people cannot trust each other and work for their best.

Until today, I took my word and never regret it. I hope I never won’t.