Panel response time is not the same as input lag but instead is a measure of how long it takes an individual pixel on the panel to switch between two colours (usually from grey to grey as that gives manufacturers the fastest time). By "panel" we mean the physical TFT panel as opposed to the whole monitor which includes the electronics needed to process the image.
Panels with a slow response time are prone to blurring moving images. Subtly blurring moving images will have an effect both on visual perception and speed of response or reaction time.
Remember panels with a 5 millisecond response time won't actually display an image in 5 milliseconds due to input lag. Panel response time varies between make and model and will typically not match the specifications stated by the manufacturer. Manufacturers cherry pick the test which makes their panel look good, i.e. when was a TFT monitor only used to display one shade of grey and nothing else?
If you are making use of moving images or RSVP then it's likely that panel response time will have an impact on a participants perception.
Panel or pixel response time is the time an individual pixel takes to switch between
two colours (this is not the same input lag). The slower the panel response
time the more blur will be seen in moving images.