I've had this same problem in every single TW game to date. Playing on the Hard or Expert difficulty seems unplayable. On Normal, the game is still ridiculously easy. It's hard to lose a battle even with odds of 3 or 4 to 1. However, when I want to give myself a challenge and try to play on hard, the difficulty spike is a cliff. It's not that the AI uses better tactics, they dont, but it always seems no matter what, every single unit of yours has next to zero morale, and will retreat at the slightest sign of danger.
It is like this in every single TW game I have ever played. Normal is too easy, but Hard and above gives you nonexistant morale so it's practically impossible to win a battle thats even in your favor. Am I hallucinating? Or is it actually this way.