Is it really the case that ladder anxiety is a distinct phenomenon and not just a symptom of lack of players full stop?
Personally, I don't play much 1v1. This is partly because I prefer teams (though there isn't all that much between a large lobster pot and 1v1) and yes partly because I don't want to get stomped again and again by people much better than me - but that's the operative phrase: again and again. I don't mind being cooked by someone out of my league from time to time, or even losing a hard fought fight against someone similar in ability to me provided I get my share of hard fought wins (and yes, issuing the odd curb stomping myself).
Last night, I played 7 games in the lobsterpot. I was on the losing side of 5 of them. That was deeply frustrating even taking into account that chance plays a much bigger role in them than small teams or 1v1. As supposedly one of the better players on my team, I look at those losses and think I must have played a bigger role in the failures than the rest of them whether through miscalculation or miscommunication. As an experienced player, I've always considered it my responsibility not just to play the game, but to try to guide less experienced players - so a loss means I've failed both as a player and as a leader. That's not a nice feeling to have.
It's plain fear of losing as Dein says, nothing special. I'm not bothered about the numbers. I just don't like losing again and again and nor does anyone else with a competitive bone in their body (and anyone playing matchmaker or team games has at least one).
More importantly, I'm not going to learn a great deal more that will improve my game from 10 consecutive losses to Sparkles
rather than 1. It's fine losing to better players if you can take something you can apply to future games from the experience but there comes a time when the gulf is simply too big. Since no one forces me to play competitive 1v1, and it's likely to lead to an unpleasant experience, I'll simply avoid the situation.
While it is true that more people playing will mean more even matchups instead of a queue to be dispatched by the apex predators, there are also positive reasons limiting the size of the competitive matchmaker pool- namely that many people simply prefer other game styles. If I've got a choice between small teams and 1v1, I'll always go small teams.
I love the recent change to the team rooms that asks if anyone present would prefer to play a small team game, but it has hardly resulted in any small team games for me. Regardless of whatever polling there was that suggests small teams are the preferred style for the playerbase, the day-in-day-out fact is that most of people who actually want to play against each other are doing it in lobster pots and doing so by choice.