Here is the abstract of a paper in the most recent version of Economic Inquiry on upsets and blowouts in tournaments:
In equilibrium play of a two-round tournament, we find that underdogs exert more effort in the opening round whereas favorites save more effort for the final. Ability differences are therefore compressed in the opening round so upsets are more likely and amplified in the final so blowouts are more likely. Measures that reduce the need to strategically allocate effort make for a more exciting final but a less exciting opening round. Consistent with the model, introduction of a rest day between matches in the NCAA men’s basketball tournament increased the favorite’s victory margin in the semfinals by about five points.
The paper is “Early Round Upsets and Championship Blowouts” by Rick Harbaugh and Tilman Klumpp of Indiana University. Here’s a link to the paper from SSRN. Here are some of Brian’s thoughts on the NCAA basketball tournament’s structure.