Need help deciding between two db setups

Between your two options; you would need option 2 because you need to assign multiple faculty members to a Thesis for reading.

There's also a  (better) 3rd option.  Assigning child-records of Faculty to a Thesis will provide better reporting in the long term; particularly if your Thesis Faculty need to have fields they fill in regarding the Thesis (yes they've read it, yes they have comments or feedback, yes it needs review etc.).  When you have multiple-persons who are responsible for entering data relating to a single-entry; storing all of that in a single record gets hard to report in a standard table-style report.  Leveraging the power of the Quickbase relationship with summary fields and lookups; you can do reporting from both the Thesis, Thesis Faculty and Faculty tables!  I recommend this one.