My personal experience suggests there is a background process taking place when interpreting a partially heard utterance. The sound is taken in, the conscious part of my mind begins the process of asking for a repetition because of imperfect reception and then a possible interpretation is delivered to my conscious mind for acceptance or rejection. Usually the logic can be seen, how a few words heard imperfectly can be combined to make sense, a partially heard name combined with a pronoun and a mental list of participants narrows the possibilities to one or two, but I don't have a sense of doing this analysis consciously. A second, almost a paraphrase, interpretation is offered up seemingly from the sub-conscious, "she's asking about Tony's birthday."
If you try to search for linguistics or language and error correction you will find out that there is a lot of concern about teacher behavior during language acquisition. That is not what I want to know about.
I would like to know if there is a subfield in cog-sci that deals with error correction specifically with regard to heard language. Somewhere I can begin a search. Sometimes all you need is the right search terms.