What type of processing involves using context and prior knowledge to understand information?

Top-down processing refers to the cognitive approach where a person's existing knowledge, experiences, and expectations shape the interpretation of information. This type of processing emphasizes the role of context in understanding new information, as individuals utilize what they already know to make sense of incoming stimuli. For instance, when reading a text, a reader might rely on the context of the topics discussed, their familiarity with certain phrases, or their overall comprehension of the subject matter to fill in gaps or decode meanings that are not explicitly stated.

In contrast, bottom-up processing starts with the sensory input itself, building understanding from the smallest pieces of information without the influence of previous knowledge. Contextual processing may sound similar but is not a formal psychological term widely recognized in the same way. Sequential processing refers to the step-by-step approach of processing information in a linear fashion, which does not inherently utilize contextual knowledge. Therefore, top-down processing is correctly identified as the method that uses context and prior knowledge to understand information.