I'm reposting a couple of my comments from the Kyrie thread. I still believe that the main reason #1s perform better is because they are better teams. However, I will grant that #2s may have a slightly more difficult road because they might have to play a dominant #1 seed in the E8. Outside of the top 2 or 3 teams depending on the year (OSU, Duke, KU this year), I feel like there is no difference between the next 5-6 teams.
Here is my thought experiment:
If we flipped the #1s and #2s for the next five years (i.e., gave the four best teams #2 seeds and the next four best #1 seeds) and left #3-16 alone, do you think more #1s or #2s would make it to the Final Four? My bet would be on the #2 seeds (who are really the four best teams).
Also, another hypothetical: If we end up as a #2 with Notre Dame as a #1, would you prefer this to being a #1 with Kentucky as your #4 seed and Texas as your #2? UT and UK are both higher than ND in Pomeroy's ratings
I feel like the committee does such a bad job seeding teams that it doesn't matter if you get a #1 or a #2 as long as you avoid majorly underseeeded teams. And since the #1 seeds on average are the best four, they are the ones who will win.
I'm not going to use actual numbers, because it's hard to separate correlation and causation while analyzing them, unless we were able to run an analysis without seeds using power ratings.