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Observational learning means, of course, learning by observing. This type of learning is also called vicarious learning, social learning, or modeling (see link below). The result of observational learning is for the learner to be able to replicate what he sees, but how effective this learning is depends upon several factors.
One factor is who is being observed. Studies have shown (again see the Princeton link below) that the most effective observational learning happens when the person being observed is close to the learner's age. Think about children and young people who see their peers as greater authorities than, say, their parents. (It is also much more effective to learn how to play a video game from someone who is an expert at the game rather than from someone who is just learning, for example.)
Another factor has to be the conditions under which the observational learning is taking place. It is sensible to assume that the closer one is to the object of observation, the more effective the learning will be. Think about surgery or a science experiment, where the students closest to the demonstration are more likely to experience effective learning from their up-close observations.
Finally, the content and the learning style of the observer must also be factors in how effective observational learning is. Visual and auditory learners may naturally experience more success than perhaps logical and kinesthetic learners, depending, of course, on the content being taught.
Though learning is something most people do innately and effortlessly almost from birth, it is also a process full of complexity and uniqueness.
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