The placebo effect, in a nutshell, is demonstrated like this: instead of giving a patient real medicine, he is given ineffective medicine (e.g. sugar pills) but the patient is nevertheless cured. This is because the patient thinks he is receiving real medicine and “knows” that it should work - thus, although really given ineffective medicine, he cures himself through some form of self-suggestion.

BBC4 has now put both parts of their radio program about the placebo effect online.

Be sure to also check this post at Mind Hacks for links to a couple of interesting papers.