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Response shift and the placebo effect, by distorting assessment of treatment effectiveness, confound health-care researchers and adversely influence the entire health care sector. Diagnostic assessments, treatment plans, and evaluation of the efficacy and cost-effectiveness of therapies, for example, are all negatively affected. Recent evidence from neuroscience, transpersonal psychology, and behavioral economics suggests that every person has two selfidentities, each with different viewpoints. This paper describes how the two self-identities theory may yield insight into the cause of both the response shift and the placebo effect; shifts between the dominance of one self-identity and the other can cause these phenomena. It concludes by detailing a method to empirically verify this hypothesis and suggesting that the two self-identities theory may help to harmonize the psychologies of East and West. [ABSTRACT FROM AUTHOR]