Some people want to play better players because they enjoy a challenge. It's win/win for them. If they lose, then there's nothing lost as they were defeated by a superior opponent. If they win, then they can revel in the knowledge that they beat a superior opponent.
Not every person feels the need to underestimate their capabilities to ensure an easy victory or overestimating their current proficiency.
Originally Posted by spot
I say this as someone who has experience running a big Round Robin. People use ridiculous grade inflation when they assess their own levels. They want to play against better players because they want to think of themselves as a better player. If they move down from where I start them it doesn't affect their perception of how good they are.