what are the differences between negotiation and binding arbitration methods of contact settlement

what are the differences between negotiation and binding arbitration methods of contact settlement?
explain which method is better? if you could give me the explaination to the negotiatio method i would really appreciate it. i need an answer to this question for my human resource economics course
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1
In negotiation, the two parties create the settlement agreement themselves, or at least try to. So they make proposals and counter propsals, trying to find a middle ground they both can accept. They are free to walk away and never reach an agreement. So there is no guarantee the process will end in a settlement. If it doesn't then they may have to resort to lawsuits etc., raising specter of HUGE legal costs. In binding arbitration, they both agree (ahead of time) that they will submit all their information and opinions to a neutral third party "arbitrator", who then plays the final decision maker, and returns a decision. The decision of the arbitrator is final. Therefore there is little risk of followon lawsuits and high legal bills. This is why many many contracts stipulate that both parties agree ahead of time to binding arbitration.


2
Not sure what your HR requires. Suggest there is a textbook definition that should form the base of your response. Negotiation is a broad term that can include all of the actions or non-actions for parties to reach a conclusion. Binding arbitration could be considered a susbset style of negotiation as it is a defined means thru which parties reach agreement.