"We know there is a placebo effect wherein patients do better when they are told they are receiving a treatment: the patients' expectations play a role in their recovery. To make sure we are studying the effect of the treatment itself and not the patients' expectations, it is better to give all patients the same expectation. So we tell them, for example, "take this pill, it might be experimental drug X or it might be a sugar pill." The double-blind part is important because we don't want the experimenters to subconsciously tip off the subjects as to what group they are in, nor to treat one group differently than the other, nor to analyze the results differently."

one thing that always strikes me about double-blind placebo based studies is that they are often testing a substance with a detectable physiological effect against an inert substance with no detectable physiological effect.

this methodology seems fundamentally flawed. if you want a true test you would need to compare against a placebo that has a similar (or at least detectable) physiological effect but is not expected to produce any efficacious outcome. otherwise the person getting the real drug feels the physiological effect and gets a placebo effect while the person getting the placebo does not.