I am reluctant to post this, but I have lost several battles and my heroes don't ever get a negative trait from it. I have seen several AI heroes with a few negative traits so I know it is working for them at least.
I think it's because hero remain alive if you won the battle.
if it's your sovereign, I don't think they ever get negative traits from dying. Not sure though.
Oh so if we win they don't get any? I never lose so that would explain alot. Kind of sucks that winners don't get to experience the full features.
When your whole army dies, the heroes can get negative traits. I already got one
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