My main purpose here is to provide an account of context selection in utterance understanding in terms of the role played by schemata and goals in top-down processing. The general idea is that information is organized hierarchically, with items iteratively organized in chunks—here called “schemata”—at multiple levels, so that the activation of any items spreads to schemata that are the most accessible due to previous experience. The activation of a schema, in turn, activates its other components, so as to predict (...) a likely context for the original item. Since each input activates its own schemata, conflicting schemata compete with (and inhibit) each other, while multiple activations of a schema raise its likelihood to win the competition. There is therefore a double movement—with bottom-up activation of schemata enabling top-down prediction of other contextual components—triggered by multiple sources. Another claim of the paper is that goals are represented by schemata placed at the highest-levels of the executive hierarchy, in accordance with Fuster’s model of the brain as a hierarchically organized perception action cycle. This account can be considered, in part at least, a development of ideas contained in Relevance Theory, though it may imply that some other claims of the theory are in need of revision. Therefore, a secondary purpose of the paper is a contribution to the analysis of that theory. (shrink)