While this can work, it requires almost every monster to be very overconfident. Boxing is sufficiently low stakes that overconfidence doesn't seem unreasonable; perhaps it's a good method to motivate yourself to work harder. A monster that actually has a 95% chance to get killed and 5% chance to win the fight (and wouldn't want to take the gamble of getting into a fight at 50/50 odds) would have to be overconfident by a huge factor to want to take the gamble.
First of all, the risks of defeat do not matter if you are convinced you'll win. That's why the death penalty has no statistical impact on crime rate ; people on death row all believed they'd get away with it! (or acted in the heat of the moment).
Secondly, how the hell would you know you are at 5% odds of winning? Or at 50% for that matter? Without an extended observation of the opponent, you can't tell with any accuracy. Visually, what differentiates a level 2 mercenary NPC from a level 6 fighter? Not much. Until you actually fight the guy and realize just how big a mistake you've made...
How can a band of monsters tell at a glance whether a warrior is +6 or +10 to hit? Whether the wizard is capable of just magic missile and minor tricks like most low level wizards NPC or whether this guy is capable of casting flaming sphere and ruin your day?
If you are, say, a typical orkish band, you have crushed humanoid by the dozens and in bands larger than the PCs. Why would that armoured guy be any more skilled than the dozens you have slain before? How can they know that this particular fighter has, with all powers accounted for, three time as many HP as they are used to in a soldier? Why would they expect that the frail looking guy in light armour blasts so much harder than the last adept they lynched?
A typical band of orks has won almost every fight it has ever been in. That's why the band still exists! In that business, you typically lose only one fight. And in an heroic saga, that one fight is against the PCs.