So, I’ll go through how the GMAT does it again (just so we can see that this isn’t something that only OW does, it’s something that all sorts of competitive ranking systems do- the GMAT has no reason to try to rig the system against anyone and it’s accepted by all the best universities as a metric for ranking people according to their skill):
When a test taker sits down to take the GMAT, the algorithm selects a question of medium difficulty to start. (This is the equivalent of being given a gold match when you play your first comp game.) But every question after that first one is selected based on the test taker’s past performance. If the test taker gets that first question correct, they are given a harder question. If they miss it, they are given an easier question.
How does the GMAT know what difficulty of question to select?
It uses a whole host of criteria (that are tracked from the test taker’s prior performance in that Quantitative reasoning or Verbal reasoning section), but at it’s most basic level, the GMAT is trying to get the test taker to have an overall 50% accuracy- the test wants to attempt to get you to miss half of your questions.
And it’s pretty good at it. It has a huge question bank of questions at a wide variety of difficulty levels it can select. Roughly 80% of test takers will end up with an accuracy of approximately 50%. Only the top 10% of the ladder and the bottom 10% of the ladder will deviate significantly from that 50% win rate.
So, to your question- how does the test know someone belongs in a certain rank (or should have a certain score in this case) if it modifies the difficulty sufficiently in order to push test takers away from answering more than 50% of their questions correctly?
Two points:
The first is that any given test taker can answer more than 50% of their questions correctly. (I usually get between 80 and 90 percent of the questions correct when I take the GMAT, for instance- that’s enough to place me well within the top 1 percentile of test takers on that test.) And any given OW player can win more than 50% of their games. (Players at the very top of the ladder will do so. As will most players who are currently ranking up.)
The second point is that the GMAT is selecting questions in order to learn more about the test taker. (Just as the matchmaker is selecting matches in order to learn more about the players in that match.) And it learns something different if it is able to push a test taker to a 50% accuracy using only Easy questions than it does if it has to pull out the hardest questions in its question bank in order to push a test taker toward a 50% accuracy. And something else again if it is never able to push a given test taker toward a 50% accuracy, even using the easiest or the hardest questions in its question bank.
Consider the following scenario:
I ask you to rank an OW team. These are a bunch of amateurs. We first pit them against a team of low bronze players. Our team wins. So we pit them against a team of high bronze players. Our team wins. So we try them out against a low silver team, and they lose. We try another high bronze team and they win. So we try them out against another silver team. etc. Our team ends up hovering around 50% accuracy when we pit them against teams in the high bronze to low silver range.
We now run the same set of matches with a different amateur team. But this team wins all of those silver games as well. They do not hit a 50% win rate until mid Masters.
Could we not, then, say that the first team is somewhere about the bronze silver border, but the second team is somewhere in mid Masters- even though we manipulated the difficulty of their matches in order to push them toward a 50% win rate?
Just as the GMAT does.