This document discusses the observation method in psychology. It defines observation as looking outside oneself to observe the mental processes of others through their overt behaviors. There are four types of observation: participant observation where the observer participates, non-participant observation where subjects are unaware, structured observation with predetermined behaviors, and unstructured observation in natural settings. The steps of observation include planning, execution while taking notes, interpretation of findings, and reporting results. Merits include its widespread use in child and social psychology while demerits include potential subjectivity and artificiality of behaviors.