In this study from the Columbia School of Business, test subjects who had the most realistic assessments of their performance were also the strongest at emotion-reading and predicting the intentions of others in a face-to-face negotiation paradigm. The poorest performers dramatically over-estimated their performance, while the best performers underestimated theirs. The poorest performers also appeared to have narcissistic traits in general.
Not surprisingly, subjects with the best interpersonal sensitivity (able to read intentions and emotions in others) were also the most desireable by their partners in negotiation (expressed looking forward to future interactions and teamwork).
Notable null effects of their studies: the Baron-Cohen social skills scale and gender were not accurate predictors of good social judgment.
In the figure below, you can see that a widely distributed bilateral brain network becomes activated with passive 'people watching'.
Mind Reading and Metacognition
Emotional Intelligence and Negotiation MIT Business
fMRI Watching Social Interactions
Emotional Intelligence Network
Using Digital Technology to Enhance Emotional Intelligence
Perceiving Intention Nature Neuroscience