[Graeme Dice]

Originally posted by Merry Jolkar:
I didn't even realize that their morale comes down! I thought it was just a series of checks. So, morale drops for a given unit if that unit gets hit, but not for other, unhit units, right?

I really can't give you a more detailed explanation than what I've already given you, since that's about as much information on morale as there is. I believe that it is some of the oldest code in the game, so the devs were not completely sure how it worked when asked.