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Expectancies are a class of psychological and neurobiological processes that may be responsible for part of the improvement observed with psychiatric treatments. Patients' expectations can substantially affect the results of clinical trials, and managing them is an important part of clinical care. This review describes the history of research on expectancy effects in Major Depressive Disorder (MDD), the relationship between expectancies and placebo effects, and what is currently known about the mechanisms of action of expectancy. Meta-analyses of antidepressant trials show that placebo response rates are high (typically ˜30%) and often larger than the difference in response rates between drug and placebo (typically ˜10%). Some of the response to placebo is due to natural history, but a growing literature suggests that much of the improvement on placebo treatment is due to active neurobiological processes related to expectancy. Several studies have shown that higher expectation of therapeutic improvement leads to greater improvement in psychiatric symptoms, particularly in MDD. New research on the mechanisms of action of expectancy is therefore a priority that could lead to improved interventions. This review discusses the evidence to date and methodological considerations in the design of new studies.