In modern contract theory, "adverse selection" characterizes principal-agent models in which an agent has private information "before" a contract is written. For example, a worker may know his effort costs (or a buyer may know his willingness-to-pay) "before" an employer (or a seller) makes a contract offer. In contrast, "moral hazard" characterizes principal-agent models where there is symmetric information at the time of contracting. The agent may become privately informed "after" the contract is written. According to Hart and Holmström (1987), moral hazard models are further subdivided into hidden action and hidden information models, depending on whether the agent becomes privately informed due to an unobservable action that he himself chooses or due to a random move by nature. Hence, the difference between an adverse selection model and a hidden information (sometimes called hidden knowledge) model is simply the timing. In the former case, the agent is informed at the outset. In the latter case, he becomes privately informed after the contract has been signed.