Now that you've considered the size of your pool, also consider who you are playing against. In today's hyper-connected word, you could, say, monitor social media to see who the trendy upset picks are. You can check out ESPN or Vegas odds to see how crowds are voting.
Again, in large pools, you want to run counter to the crowd, at least as far as the champion is concerned. However, remember that you aren't playing in a vacuum. If you live in the state of Michigan, are in a local pool and pick three-seed Michigan State and four-seed Michigan to go deep into the tournament, you aren't picking for value. Rather, you are still following the herd. Sure, ESPN might not value these teams highly, but your neighbors with Spartans and Wolverines flags on their porches will probably overvalue them.
However, if you live in the Research Triangle Park and pick Duke to get knocked off early, you may well get value out of that strategy, especially if you think the three-seed in their region, Michigan State, is a bad matchup for them and will likely knock them off in the Sweet Sixteen anyway. Why not take a flyer on Creighton to knock of Duke, then? It'll only cost you one game if you're wrong about Creighton but right about Michigan State.
When picking upsets, don't focus on just the game itself. Also factor in the ramifications for the rest of the bracket. If you think Louisville could lose in the Round of 32, great. But what if anything past that round plays to their strengths? If any one particular upset could really blow up your bracket, stay away from it.
In any pool I've ever been in that favors upsets, the real badge of honor (even if the money isn't as good) is picking the most upsets. You just seem smarter and more daring, especially when any knucklehead could have picked Duke.
Those are exactly the kinds of pools you should pick Duke in, though. Let everyone else fight over the upset money.
If you are going to focus heavily on upsets, though, consider probabilities. Since 1985, no sixteen seed has ever knocked off a number one; only six fifteen seeds have ever knocked off number twos (although two of these were last year), and only fourteen teams seeded fourteenth have beaten a number three.
However, a thirteen knocking off a four happens has happened twenty-four times since 1985, and exactly once a year since 2001. And if you choose your eleven and twelve seeded upsets wisely, since each statistically occurs once per year, you could be in really good shape.
Now, I'm not saying teams don’t get hot. Maybe the hot team had a leaky defense and has finally buckled down. Maybe it stopped settling for low-percentage contested jump shots and has its guards driving to the hoop more often. Maybe a key injured player came back. There are a million and one ways teams can get better in the postseason than the regular season. Last year's Stanley Cup playoffs are one of the best recent examples of this. The Los Angeles Kings barely made it into the playoffs, but once in, they dominated.
Look a little more closely, though, and it's not such a big surprise. Los Angeles changed coaches, added a scorer (Jeff Carter) at the trade deadline, and was already one of the top defensive teams in the league. Given the parity in the NHL, not all that much had to improve to vault them from average to Cup contender.