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The development of self psychology by Heinz Kohut illustrates the influence of observational method on theory formation in psychoanalysis. In 1959 Kohut began to emphasize empathy and introspection over the traditional combination of free association and evenly suspended attention. This became an important part of a process of revision in psychoanalytic theory which culminated in self psychology. This paper demonstrates how and why that particular change in observational method influenced that particular revision of theory.