The thing to do would be to "shadowban" the worst offenders and make it so they only get matched with other shadowbanned users. I think there's a game that already does this. At that point, they can just enjoy playing "to put it simply the psychological warfare is part of the game " against each other. Now, my theory is that this "psychological warfare" is only fun when you're the only one doing it and other people are trying to be reasonable. When it's 10 people screaming constantly over voice chat, griefing and generally being terrible, I suspect the "psychological warfare" becomes way less fun.

EDIT: I just looked it up, DOTA 2 does this.

Competitive games never foster a friendly community, as players, by design, compete against one another, rather than working together. Trying to force a spirit of sportsmanship onto those communities is bound to fail.

Online games for the most part, are inherently competitive. When you combine competitiveness with anonymity it's pretty easy for it to go toxic. I don't think you can remove the toxicity from competitive online games anymore than you can remove bar fights out of sports bars. In my experience games that aren't competitive but are still online do not have this problem. Save for the occasional troll who gets off on being a stinker.

I just want to play games with nice normal people, is that really so much to ask?

Yes, actually, this is a very large ask.

You should probably come to terms with the reality that "nice normal people" don't really exist. There are nice people, and there are normal people, and the overlap on that Venn diagram is a tiny sliver. Also, everybody has bad days where their stress gets the better of them, and you never know when you're just seeing someone at their worst because their car broke down, they're late on the rent, their mom is in the hospital and their kid's teacher wants to have a meeting about in-class behavior for the third time this month.

People use video games as a place to relieve stress, and the general lack of consequences in the rest of their life enables that. I'm not saying its right, but I am saying that other people deserve your patience and understanding more than your judgementalism.

As for why game developers don't do more about what you consider bad behavior, the simple fact is that you can't solve social problems with technology.

Some people are just out there playing the "induce rage" metagame. They enjoy upsetting others more than the game itself.

Having personally played Rocket League, (1800 hours), Valorant (500? hours), CSGO (2000 hours), League of Legends (2000? hours) and a variety of coop multiplayer games, I can tell you that the most toxic communities tend to be the competitive ones. Something about competitive games draws out the most hardcore crowd and that crowd tends to be a lot less friendly. Maybe it's because people who play ranked games care about their ladder MMR, and the ones who are able to keep playing must have some kind of ego - you have to understand that a lot of people get fun out of winning, not from just participating in the game.

Regardless, the mechanism that rewards players is skill. And in these games, being polite, being nice to your teammates, none of it really matters if you aren't skilled. Inherently there is a pecking order because higher ranked players are better than lower ranked players. Most games don't reward direct toxicity of higher ranked players towards lower ranked players, but they don't forbid it. Smurfing, for instance, allows a player to assert their superiority over lower skilled players. A carry on a team can be significantly more toxic towards their teammates since their teammates want the MMR from a win and will be willing to put up with being bullied or harassed. Just like another commenter mentioned, players compete against each other, and you will not really be friendly with your opponents in most ranked settings. But additionally, players also rely on their teammates. I think this is where a lot of the toxicity comes from.

When your friend dies to the enemy and gets t-bagged, your teammates aren't pitying your friend for getting t-bagged. They're mentally rolling their eyes that your friend was outplayed by their opponent and that's why when you post on a forum the result is usually "git gud" and not "we should be more friendly". I don't think being toxic is positive to the health of a game. I could go into detail, but this post is already pretty long. But I want to point out, if the setting is a competitive game, merit is usually the driving factor regardless of toxicity or kindness. If you don't gain that dopamine hit out of outsmarting or beating your opponents but rather simply from playing the game or socializing with other players, you probably should not bother touching these games - you aren't the core audience for these games and you'll find more enjoyment in other settings.

For the record, if you get t-bagged in a competitive game, the recourse is to either not look at the kill cam (CS:GO lets you turn it off), or try to improve so you don't get t-bagged as often. Ragequitting, or going to complain that it should be turned off will get you nowhere. BMing your opponent is a popular thing in most competitive games, and it's part of the reward for outplaying them. In many eyes, it's not really all that different from a giant defeat screen when you lose. If you're sensitive to this kind of stuff, I think you should find more friendly communities. Coop games generally tend to be better, as do more casual games, or FFXIV if you're looking for an MMO. I would say most players (me included) consider the option to t-bag a feature and not a bug, because really the thing that upsets me the most is not getting t-bagged; it's getting outplayed by my opponent so they're able to do it in the first place.

Dota 2 has an ability score and a bunch of report mechanics. I think they've finally got it tuned really well. I haven't experienced toxicity in a while tbh. It definitely still exists and it's got to be a very hard system to balance. They've iterated on it a lot!