Naruto Uzumaki: Everyone... everyone... has risked their lives to come after you.
Sasuke Uchiha: Well, how good for them.
Naruto Uzumaki: Believe it.
Kakashi: Uh, Naruto, your speech was cool and all, but if you lose any more blood, you're going to die.
Deidara: Art is... with a bang.
Rock Lee: A dropout will beat a genius through hard work.
Answer: Out-of-character, because single elimination is the most exciting format for the viewers of the anime. In-character, a possible reason is that the failure of single elimination to correctly identify the second and lower places was only recognised relatively recently - there is an essay by Lewis Carroll (yes, that Lewis Carroll), describing the problem in detail, written in 1883. Ninjas were around in about the 1300's, so it probably hasn't been discovered yet. Of course Naruto's history might not match real history but if you depart from reality then there can be no answer but the out-of-character one.
Moose ★