From Wiki:
MP3 compression works by reducing (or approximating) the accuracy of certain components of sound that are considered (by psychoacoustic analysis) to be beyond the hearing capabilities of most humans. This method is commonly referred to as perceptual coding or as psychoacoustic modeling.
Psychoacoustics is the branch of psychophysics involving the scientific study of sound perception and audiology—how human auditory system perceives various sounds. More specifically, it is the branch of science studying the psychological responses associated with sound (including noise, speech, and music). Psychoacoustics is an interdisciplinary field of many areas, including psychology, acoustics, electronic engineering, physics, biology, physiology, and computer science.[1]
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