How do placebos work?

Skeptic magazine documents our current (somewhat frail) understanding of placebos:

We not only know placebos “work,” we know there is a hierarchy of effectiveness:

• Placebo injections work better than placebo pills
• Capsules work better than tablets
• Big pills work better than small
• The more doses a day, the better
• The more expensive, the better
• The color of the pill makes a difference
• Telling the patient, “This will relieve your pain” works better than saying “This might help.”