http://www.sciencedaily.com/releases/2007/03/070326095423.htm - Toddlers Engage In 'Emotional Eavesdropping' To Guide Their Behavior
The experiments are the first demonstration that infants can modify their own behavior in response to an emotional communication that does not involve them. "There are lots of studies of how the emotions parents directly communicate to their infants have an impact on their behavior. No one before considered if infants can take in emotional information when directed toward someone else and apply it to themselves," said Repacholi. "By observing and analyzing other people's emotional behavior, infants are able to quickly learn some important lessons. It is not only an extremely efficient way of looking at the world but is also highly adaptive. Infants can use emotional eavesdropping to avoid some of the negative consequences that might arise were they to perform an action themselves. It is also a pretty adaptive way of interpreting what is important and what they can get away with."
This is apparently a skill we lose as we grow older.