How Does the Placebo Effect Work?

Think of the scene from Harry Potter where Harry makes Ron think that he has spiked his drink with the liquid luck potion. Ron then goes on to play the best game of Quidditch he’s ever played, only for Harry to later reveal that he didn’t actually put anything in Ron’s drink. Ron played well because he thought his drink contained the liquid luck potion. 

This is called The Placebo Effect. But how does it work, exactly?

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