Distinguishing Moral Hazard from Adverse Selection
In both moral hazard and adverse selection, there is information asymmetry between the two parties. The main difference is when it occurs.
In a moral hazard situation, the change in the behavior of one party occurs after the agreement has been made. However,
in adverse selection, there is a lack of symmetric information prior to when the contract or deal is agreed upon.
道德风险和逆向选择的主要区别:信息不对称发生在协议(合同)之前还是之后。