Dear Manik,

Observation method is objective as observation is made not only of the subject's behaviour but of the situation as a whole.

In introspection we can observe the mental process of ourselves only, but in observation, we observe the  mental processes of  others. Hence Observation is the most commonly used method for the study of human behaviour.

The observation method provides high accuracy since the observer directly interacts with the observed. Personal prejudices, or in other words, subjectivity on the part of the observer can be a big drawback of the observation method.

It's demerit is Observation is a costly method since it requires a lot of things. There is great scope for personal prejudices and bias of the observer. The observers interest, values can distort observation.

Records may not be written with hundred percent accuracy as the observations are recorded after the actions are observed. There is some time lag.

Hope this answers your query.

Good Luck :)