It is a tricky analysis around which concept as the "worse impact." Adverse Selection results in less transactions overall because of the asymmetric information that may lead one party to not engage in the transaction in total (reducing economic activity and growth). Moral Hazard results in changed behavior AFTER a transaction has begun that affects the overall cost of that transaction. This could result in increased costs that, if they were known before, would have make the transaction unprofitable for one of the parties. We see this from the recent banking bailouts and examples of unemployment insurance during the pandemic