User blog comment:Lord Loss/Monster Hunter Theory... Blog/@comment-81.159.201.139-20130107171425/@comment-108.64.165.151-20130112204413

I personally beleive it is an act of mimicry. My reasoning:

1) Lao shan lung is a much larger threat than shen goaren, it uses the shell the same way a fish will use the eye spots on it's tail: to scare away potential predators.

2) The shogun ceanitaur and diamyo hermitaur would most likely use their shells the same way.

3) The reason the skulls are so much larger is because monsters like lao shan lung would likely be a predator of shen. The larger skull size is for added protection.

4) These shells could easily be made out of keratin, like normal shells on snails, or limestone, which the crabs could craft with their large claws. This would also explain why the skulls never have any flesh left on them.