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The Malmquist bias is a selection bias applicable to astronomical surveys stemming from missing the dimmest objects. The further away, the larger percentage of objects at that distance will be too dim to be detected, and the collected observations will include both bright and dim objects at nearer distances but only the brighter ones at greater distances. In other words, the greater the distance, the stronger the preference (bias) toward brighter objects, thus characterizations of the randomness of sample-sets must take this into consideration. Generally, the brightness is associated with the type or size of the object, and population statistics at different distances need to take the bias into account. For example, you should not conclude that distant portions of the Milky Way have fewer G-type main sequence stars than nearer portions, if you see fewer simply because such stars are not bright enough for your telescope to sense at that distance.
This is in contrast to another type of observation bias, the Eddington bias. I've seen references that call two terms synonymous, but to my understanding, the Eddington bias stems from brightness measurement errors (or perhaps "errors" from seeing, reddening, extinction and the like), whereas the Malmquist bias stems from distance alone and applies even if the brightness measurements are unaffected by these factors. However, it is possible there is a means of compensating for them that address both biases.