Is this like the thing the Dutch tried?
I think the psychology is that, on regular streets, drivers expect pedestrians to "stay on the pavement", out of their way and drive as fast as they think it's safe to do so.
When you change the rules and give everyone equal priority, they change behaviour, become protective about people crossing their path, slowing down and becoming more alert.
If you cycle along Oxford street, the pavements are densely packed with people and, because the bike is silent, people will not stop to look before dashing to that shop, opposite. The rider/driver will not see the sideways pedestrian movement until they're beyond the edge of the pavement.
In a pedestrianised zone, the crowds can spread out and you get more advance notice that someone else's path is crossing yours, giving you more time to slow down or stop.