I don't quite understand your question about the use of the word "for."
He was punished for lying. "for" goes with "to punish" to idenitfy what behavior was the problem.
I also thought it felt like a word was missing. You can say "were punished for performing" or "are punished for performing" or "being punished for performing." But you can also say "...that we observed others bei
I don't know if it's incorrect, but it makes the reader work harder to understand it. But then, a lot of academic writing does that.
I favor simplicity. Vicarious punishment means we are less likely to perform certain behaviors if we observe others being punished for performing them.
(This reminds me of that experimenet with the monkeys and the bananas and the shock.)