The argument types of function calls are resolved according to the following steps.
Function Argument Type Resolution
Check for an exact match in the pg_proc system catalog. (Cases involving unknown will never find a match at this step.)
If no exact match appears in the catalog, see whether the function call appears to be a trivial type coercion request. This happens if the function call has just one argument and the function name is the same as the (internal) name of some data type. Furthermore, the function argument must be either an unknown-type literal or a type that is binary-compatible with the named data type. When these conditions are met, the function argument is coerced to the named data type without any explicit function call.
Look for the best match.
Make a list of all functions of the same name with the same number of arguments for which the input types match or can be coerced to match. (unknown literals are assumed to be coercible to anything for this purpose.) If there is only one, use it; else continue to the next step.
Run through all candidates and keep those with the most exact matches on input types. Keep all candidates if none have any exact matches. If only one candidate remains, use it; else continue to the next step.
Run through all candidates and keep those with the most exact or binary-compatible matches on input types. Keep all candidates if none have any exact or binary-compatible matches. If only one candidate remains, use it; else continue to the next step.
Run through all candidates and keep those that accept preferred types at the most positions where type coercion will be required. Keep all candidates if none accept preferred types. If only one candidate remains, use it; else continue to the next step.
If any input arguments are unknown, check the type categories accepted at those argument positions by the remaining candidates. At each position, select the string category if any candidate accepts that category (this bias towards string is appropriate since an unknown-type literal does look like a string). Otherwise, if all the remaining candidates accept the same type category, select that category; otherwise fail because the correct choice cannot be deduced without more clues. Also note whether any of the candidates accept a preferred data type within the selected category. Now discard candidates that do not accept the selected type category; furthermore, if any candidate accepts a preferred type at a given argument position, discard candidates that accept non-preferred types for that argument.
If only one candidate remains, use it. If no candidate or more than one candidate remains, then fail.