When one thinks about psycho-acoustics, one has to think about what certain frequencies or sounds meant to our prehistoric selves. First of all, we do not hear all frequencies the same way. Our ears are far more sensitive to mid-range frequencies than to high and low-range frequencies. See the chart below:
Without going too far down the rabbit hole, the lower the line is in the chart, the more sensitive our hearing is in that area. Notice that the curve flattens out as the volume increases, thus, as things get louder, things begin to even out. Also, notice how sensitive the human ear is to frequencies in the 2khz-8khz range. This is the baby cry, nails on a chalkboard, or human scream (particularly female/pre-adolecent child) range. Think about how those sounds make you feel and how they would have helped our prehistoric selves to survive. Think about how powerful your favorite track or film sounds with a good sub-woofer. Or the soothing nature of low mid-range underwater sounds (like in the womb), or how piercing and uncomfortable high frequencies can feel.
So how can you use this knowledge to make up for bad acoustics? If you know what your acoustic problems are (and how they feel), you can compensate for them in your work. You can ignore a bit of mid- range mud if you know your room is responsible for it.
If you turn down the volume on your monitors you now know you are putting a magnifying glass on the mid-range frequencies of your piece. As you turn the volume up, you get a more and more balanced picture until the hype(lows and highs) mentally begin to take over.