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Here are four explanations of how ratings are computed for newcomers (players who do not have a previous rating) at a tournament, in order of increasing accuracy and technical detail. Questions should be directed to John Chew.
A newcomer’s initial rating is the rating s/he would have had to have had in order for his/her rating to have remained unchanged after their first tournament.
If there is only one newcomer in a division, then the newcomer receives an initial rating equal to their performance rating (the rating the newcomer would have had to have had before the event in order for it to have remained unchanged), except that an initial rating may never be less than 500, and it may not exceed a newcomer’s strongest opponent’s rating by more than 400 times the newcomer’s winning percentage.
If there is more than one newcomer, then they are assigned provisional ratings equal to their average opponent rating, which are then repeatedly replaced by their performance ratings until the ratings stablise.
The reference implementation of the rating algorithm is in Perl and can be found as part of the tsh software distribution in the Ratings::Elo::RateNewcomersCorrectly() method.
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