Hi Christopher,
It's totally based on your cancellation policy. It looks like you're using the "Flexible" policy right now, which means people can cancel on you up to the day before their arrival! Moderate would allow full refund so long as they did so by 5 days before arrival.
You can read more about how the different cancellation policies work here:
https://www.airbnb.com/home/cancellation_policies#moderate
You can change what cancellation policy your listing uses - under the "Cancellation" section 🙂
I've changed mine to Strict and haven't had a drop in reservations. It may be different in your area depending on competition.