There is no wavefunction collapse in the Many Worlds Interpretation. The entire wavefunction, including the observers, continues to evolve according to the usual rules during and after observations. You just end up with a wavefunction representing all of the possible observer states. It’s mathematically pleasing, in that it removes the need for an ad hoc addition to the QM machinery, but it comes at the cost of effectively denying the observed phenomena that the theory is supposed to explain.
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