Prior information about features of a stimulus is a strong modulator of perception. For instance, the prospect of more intense pain leads to an increased perception of pain, whereas the expectation of analgesia reduces pain, as shown in placebo analgesia and expectancy modulations during drug administration. This influence is commonly assumed to be rooted in altered sensory processing and expectancy-related modulations in the spinal cord, are often taken as evidence for this notion. Contemporary models of perception, however, suggest that prior information can also modulate perception by biasing perceptual decision-making - the inferential process underlying perception in which prior information is used to interpret sensory information. In this type of bias, the information is already present in the system before the stimulus is observed. Computational models can distinguish between changes in sensory processing and altered decision-making as they result in different response times for incorrect choices in a perceptual decision-making task (Figure S1A,B). Using a drift-diffusion model, we investigated the influence of both processes in two independent experiments. The results of both experiments strongly suggest that these changes in pain perception are predominantly based on altered perceptual decision-making. The Authors.