The "observer effect", refers to changes that the act of observing something has on the act being observed. For e.g. -- in science -- you can't look at an electron or a photon without altering it's behavior, it's also true in sociology -- people often change their behavior if they know they are being watched. http://en.wikipedia.org/wiki/Observer_effect

To me, the "observer effect" in quantum mechanics (that the position, velocity, etc. of a particle cannot be observed without changing it) is all about the movement of information, and has nothing to do with whether anybody is awake. (Consciousness sounds less mysterious when we call it by its other name: "being awake.") The effect takes place when the measurement is made, even if nobody ever becomes aware of it. I think a particle contains only so much information. If you extract some of the information, it isn't there anymore. I think that under the rules of quantum mechanics, information can only be moved around and cannot be copied (see article: "A Single Quantum Cannot Be Cloned") So I think the "observer effect" is a consequence of the movement of information out of the particle. Digression: If a particle always contains a fixed amount of information, and you extract some in making a measurement, then it would follow that an "observation" (of a particle by another particle) must be an EXCHANGE of information. If my particle observes yours, not only must your particle change, but my particle must change also. Your particle has observed my particle at the same time as my particle observed your particle. Observation is mutual.

The observer effect, or 'observer bias', has any of various context-specific meanings. In science, the term observer effect refers to changes that the act of observing will make on the phenomenon being observed. For example, for us to "see" an electron, a photon must first interact with it, and this interaction will change the path of that electron. It is also theoretically possible for other, less direct means of measurement to affect the electron; even if the electron is simply put into a position where observing it is possible, without actual observation taking place, it will still (theoretically) alter its position. In physics, a more mundane observer effect can be the result of instruments that by necessity alter the state of what they measure in some manner. For instance, in electronics, ammeters and voltmeters need to be connected to the circuit, and so by their very presence affect the current or the voltage they are measuring. Likewise, a standard mercury-in-glass thermometer must absorb some thermal energy to record a temperature, and therefore changes the temperature of the body which it is measuring. A common lay misuse of the term refers to quantum mechanics, where, if the outcome of an event has not been observed, it exists in a state of 'superposition', which is akin to being in all possible states at once. In the famous thought experiment known as Schrödinger's cat the cat is supposedly neither alive nor dead until observed — until that time, the cat is both alive and dead (technically half-alive and half-dead in probability terms). However, most quantum physicists, in resolving Schrödinger's seeming paradox, now understand that the acts of 'observation' and 'measurement' must also be defined in quantum terms before the question makes sense. From this point of view, there is no 'observer effect', only one vastly entangled quantum system. A significant minority still find the equations point to an observer; Wheeler, who probably worked more deeply on this subject than any physicist thus far, devised a graphic in which the universe was represented by a "U" with an eye on one end, turned around and viewing itself, to describe his understanding. The Heisenberg uncertainty principle is also frequently confused with the "observer effect". The uncertainty principle actually describes how precisely we may measure the position and momentum of a particle at the same time — if we increase the precision in measuring one quantity, we are forced to lose precision in measuring the other. Thus, the uncertainty principle deals with measurement, and not observation. The idea that the Uncertainty Principle is caused by disturbance (and hence by observation) is not considered to be valid by some, although it was extant in the early years of quantum mechanics, and is often repeated in popular treatments. There is a related issue in quantum mechanics relating to whether systems have pre-existing — prior to measurement, that is — properties corresponding to all measurements that could possibly be made on them. The assumption that they do is often referred to as "realism" in the literature, although it has been argued that the word "realism" is being used in a more restricted sense than philosophical realism. A recent experiment in the realm of quantum physics has been quoted as meaning that we have to "say goodbye" to realism, although the author of the paper states only that "we would [..] have to give up certain intuitive features of realism" . These experiments demonstrate a puzzling relationship between the act of measurement and the system being measured, but it is unclear if they require a conscious observer or not. http://en.wikipedia.org/wiki/Observer_effect Fundamental to contemporary Quantum Theory is the notion that there is no phenomenon until it is observed. This effect is known as the 'Observer Effect'. 1 The implications of the 'Observer Effect' are profound because, if true, it means that before anything can manifest in the physical universe it must first be observed. Presumably observation cannot occur without the pre-existence of some sort of consciousness to do the observing. The Observer Effect clearly implies that the physical Universe is the direct result of 'consciousness'. This notion has a striking resemblance to perennial esoteric theory which asserts that all phenomena are the result of the consciousness of a single overlighting Creative Principle or the Mind of God. http://www.vision.net.au/~apaterson/science/observer_effect.htm The difference that is made to an activity or a person by it being observed. People may well not behave in their usual manner whilst aware of being watched, or when being interviewed while carrying out an activity. Many forms of research involve similar problems and allowing for these in interpretation is a key professional skill for researchers. Commercial researchers actively use their experience of conducting many interviews and observations over time, building useful benchmarks about observer and interviewer effects in general. http://www.aqr.org.uk/glossary/index.shtml?observereffect