Prosocial behavior is fundamental to societies. But when and toward whom do humans act generously? We investigate the impact of a listeners' gaze direction and the emotional context of the story heard on (a) perceptions of their social cognition skills and (b) prosocial decisions toward them. In three experiments (two preregistered, N = 486), human participants witnessed prerecorded video encounters between a listener (visible) and a speaker (audible, not visible). The listener either established eye contact, averted gaze, or showed a mixed gaze pattern (gaze direction), while the speaker told a neutral or negatively valenced autobiographic episode (emotional context). Participants rated the listeners' empathy and perspective-taking after each video and played the trust game (Study 1) or the dictator game (Study 2) with the listener. Replicating previous findings, occasional gaze avoidance, especially during negative narrations, increased attributions of social understanding to the listener. Critically, mediation analyses revealed that listeners perceived as empathic and taking perspective were ultimately treated with more trust and generosity in strategic and nonstrategic economic games, suggesting that social signals and contextual cues can serve as an indication of another's reputation, thereby promoting indirect reciprocity. Last, in Study 3, we show that emotional context, but not listeners' gaze behavior, promoted the spread of generosity toward anonymous, previously unobserved individuals in a dictator game, driven by social cognition skills attributed to the listener. We conclude that social signals and contextual cues can be important drivers of cooperation in societies via mechanisms such as indirect reciprocity and social contagion of generosity. (PsycInfo Database Record (c) 2024 APA, all rights reserved).