Increasing a cache's associativity (with all other parameters kept constant)
statistically reduces the miss rate. However, there can be pathological cases where increasing a cache's associativity would increase the miss rate for a particular workload.
Consider the case of direct-mapped compared to a two-way set associative cache of equal size. Assume that the set associative cache uses the LRU replacement policy. To simplify, assume that the block size is one word. Now, construct a trace of word accesses that would produce more misses in the two-way associative cache.