The basic questions that Practical Legal Studies confronts are how judges decide cases and how judges should decide cases. The traditional analytic response to these questions has been that judges apply formal methods of legal reasoning, and the formal methods sufficiently comport with the courts' role in the political structure to provide legitimacy. That response has been untenable for a generation or more; thus PLS has moved to informal legal reasoning as a description of adjudication and as a source of legitimacy.

Posner presents a two-part response to the questions. First, judges can relatively easily arrive at the correct decision in many cases by applying either some form of "exact inquiry" or of "practical reason." Second, some indeterminate cases remain in which the correct result is unavailable through these methods; the judge's job in those cases is to apply policy analysis to reach results which are reasonable, if not demonstrably correct.