The discovery may help scientists identify brain regions critical for interpreting communications cues and what brain malfunctions may cause some complex social disorders.
Researchers have long observed how animals vigorously sniff when they interact, a habit usually passed off as simply smelling each other.
But Daniel W Wesson, of Case Western Reserve University School of Medicine found that rats sniff each other to signal a social hierarchy and prevent aggressive behaviour.
Wesson, who drew upon previous work showing that, similar to humans, rodents naturally form complex social hierarchies, used wireless methods to record and observe rats as they interacted.
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Wesson found that if the subordinate didn't do so, the dominant rat was more likely to become aggressive to the other.
Wesson theorised the dominant rat was displaying a "conflict avoidance signal", similar to a large monkey walking into a room and banging its chest.
In response, the subordinate animal might cower and look away, or in the case of the rats, decrease its sniffing.
"These novel and exciting findings show that how one animal sniffs another greatly matters within their social network," said Wesson.
"It is highly likely that our pets use similar communication strategies in front of our eyes each day, but because we do not use this ourselves, it isn't recognisable as 'communication'," he added.
Wesson's findings represent the first new form of communication behaviour in rats since it was discovered in the 1970s that they communicate through vocal ultrasonic frequencies.
The research provides a basis for understanding how neurological disorders might impact the brain's ability to conduct normal, appropriate social behaviours.