This is an assumption question - and more specifically since they ask for an assumption that is "required" we know that it is seeking a necessary assumption. Since the question is seeking a necessary assumption, we need to find the assumption that is absolutely, positively logically necessary for the argument to hold water.
Another way of saying that it's absolutely logically necessary is that if it is not true, the argument does not hold water. Which means that if we negate an answer choice and it is the correct answer choice, the negated answer choice will pulverize the correct answer. For more on negating, I'd recommend our blog posting on this:
http://www.atlaslsat.com/blog/index.php ... -the-lsat/Anyways, let's look at the specifics of this question. The argument essentially states that when we get punished we don't feel shame, even though shame seems to be often what keeps us from hurting other people. The argument thus concludes that increasing punishment may decrease our care for others.
If you notice some sort of logical gap in the argument, great! That shows that you have really understood it and know how it is working. If you don't notice a logical gap, no biggie. Working by process of elimination we should be reading through all of the answer choices anyway, not just cherry picking what we like after reading only half the answer choices!
Let's take a look at each of the answers, thinking of this as a first pass through.
(A) is out of scope. We are not talking about the morality of an action but rather what people do. Eliminate it.
(B) has all the words I also saw in the argument, so it's right on in terms of scope.
(C) is out of scope. We have not seen anything about people being concerned about their own well being. Eliminate it.
(D) is out of scope. We haven't talked about threats of punishment v. punishment. Eliminate it.
(E) is a strong generalization - the "everybody" makes me nervous. Still, I'll keep it on this first pass.
This leaves me with (B) & (E). I'll try to figure out why one of these is wrong or why one is correct.
Let's go back to (E). Do I really need it to be true that everyone can feel guilt or shame? Not really. This is a probabilistic argument, talking only about tendencies and not about absolutes. I don't need this.
So by process of elimination, the answer must be (B). But let's think about why this would be.
(B) actually points out something tricky - and to be honest something I am not sure I would have noticed right off the bat on an exam question. In particular, the argument goes from talking about transgressions in the premises to talking about ignoring the welfare of others. But this is the LSAT and I can't bring in outside knowledge, so I don't necessarily know that these two categories overlap. In fact, the author is assuming that they do. (B) identifies this assumption.
I hope this helps. Please feel free to reach out if you have any follow up questions!