Ok, we do know that bungie uses a modified version of TRUESKILL, so if you do not know anything about how it works, you can either look it up, or read my brief description of it below.
TRUESKILL is basically a more advanced version of ELO ratings, if you are familiar with that. How? well, ELO ratings was developed for chess and only really work for 1v1, so it becomes less accurate with more than 2 people. So Microsoft developed TRUESKILL, which is the basis for a lot of XBL games that have rankings in them.
I read through the detailed information about TRUESKILL, and there is a lot fo math involved in it. The equations themselves were not that complicated, but the concept of where the variables that were being put in the equations was beyond me.
So in short, there are 2 factors that TRUESKILL uses:
1) Your current rank
2) Your measure of uncertainty (as in, how consistent or inconsistent is your playing?) the more games you play, the more certain the system is of your level of skill. So the more games you play, the less you will eventually level up if you play consistently.
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MY TAKE ON THE SYSTEM
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TRUESKILL only works off of the final results of each game, but we don't know which standings that Bungie's modified version works off of.
This system obviously is more advanced than just the total number of kills that you accumulate, it has something to do with the K/D ratio. However, there are still people out there that win many games in a row with a good K/D ratio and still don't level up. So this system has to work off of more than just your K/D ratio.
Here is an example of what I am trying to show:
Team A
person a=lvl 30
person b=lvl 20
person c=lvl 20
person d=lvl 20
TEAM B
person 1=lvl 25
person 2=lvl 25
person 3=lvl 25
person 4=lvl 20
Team B kills breakdown:
Person 1,2,3: killed person B,C,D 5 times each
Person 4: killed person A 5 times.
Team B deaths breakdown:
person 1,2,3 died 5 times each from person A
person 4 did not die at all.
K/D ratios:
Person A: 3.0
Person B:0.3333
Person C:0.3333
Person D:0.3333
Person 1: 3.0
Person 2: 3.0
Person 3: 3.0
Person 4: 5/0==infinity
Now study this over a bit. Notice that the 25's kill the 20's, like their ranks predict that they should, but they get no kills off of the level 30, like the ranking system predicts. Yes they got a high K/D ratio, yes they won, but it was exactly what the ranking system predicted would happen.
But look at person 4. The lowest rank here, and yet he got all of his kills off of the highest ranked opposing player. Yes he got a good K/D ratio, yes he won, but he won by getting his kills off of the highest ranked player, which is not what the system predicts, so he should be the only one to get a significant increase in rank.
So what is the bottom line?
What I have come to believe is that the system that Bungie uses goes off of your K/D ratio, but not only the K/D ratio, but who you killed and who killed you. If you kill a higher ranked player more than you die from him, you should go up, but at the same time, if you die from a lower ranked player more than you kill him, you should go down, provided your team loses that match.
What happens is when you get to the skill level that you are supposed to be at, in theory you should die the most from the highest leveled players on the other team, and kill the lower leveled players the most. Could this be that uncertainty factor in TRUESKILL? I think so.