Explain the reasoning behind this given argument

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Reference no: EM131499970

Question: In a test for asymmetric information in the French auto insurance market, Chiappori and Salani6 [2000] look at the relationship between the comprehensiveness of an individual's policy and the cost per unit coverage. Their argument is that, in the presence of asymmetric information, the more comprehensive the coverage, the greater the cost per franc of coverage. Explain the reasoning behind this argument. (By the way, they find no evidence for asymmetric information on this basis.)

Reference no: EM131499970

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