We develop a model of consumer learning and choice behavior in response to uncertain service
at the marketplace. Learning could be asymmetric, i.e., consumers may associate different
weights with positive and negative experiences. Under this consumer model, we characterize the
steady-state distribution of demand for retailers given that each retailer holds constant in-stock
service level. We then consider a non-cooperative game at the steady-state between two retailers
competing on the basis of their service levels. Our model yields a unique pure strategy Nash
equilibrium. We show that asymmetry in consumer learning has a significant impact on the
optimal service levels, market shares and profits of the retailers. When retailers have different
costs, it also determines the extent of competitive advantage enjoyed by the lower cost retailer.Operations Management Working Papers Serie