As per my understanding, they didn't see a reason to.

They loaned millions to Saddam during the Iran-Iraq War and they wanted that money back, and were willing to exert pressure on him to get it back sooner.

Because of the damage done by the recent war, the Iraqi economy needed as much money as possible and so, by messing with their most important export, the Kuwaiti government seemed to believe that Saddam would feel compelled to pay back the loan quicker in order to end the pressure on his economy.

In my opinion, I believe there may also have been an intention to keep the Iraqi government weakened so that it wouldn't pose as much of a military threat and in order to limit it's regional influence. That's just my belief, though - I don't have anything concrete to prove it or disprove it as of yet.

Obviously, Saddam didn't give back the money but threaten the Kuwaiti government instead. The Kuwaiti government, however, was kinda unfazed. They didn't see those threats as anything more than a bluff designed to pressure them to let-up their own pressure. The Kuwaiti Emir even went so far as to say something along the lines of how the situation would all blow over like a summer breeze.

The Kuwaiti government was aware that there was a military build-up by the Iraqi dictatorship but, again, thought it was a bluff. At the very least, they thought there might be a limited invasion into the northernmost parts of Kuwait followed by international arbitration about the matter, but nothing more.

The fact that the Iraqi government was still engaged in negotiations, and that Saddam had told the likes of Hosni Mubarak that there'd be no war, helped convince the Kuwaiti government that they had nothing to fear. Plus, they felt they could rely on their allies (including the US government) to act as a suitable deterrent should Saddam get any more extreme ideas.

Of course they weren't totally blasé about the whole thing, but that's mostly the tone of their approach to the situation. One historian described it quite well as an approach of both arrogance and fear. There'd be instances where, for example, the Kuwaiti army was placed on alert or urgent government meetings were called, but mostly they felt secure that they'd call Saddam's bluff, he'd drop the "tough guy" act, and start handing back the money

The US government was quite concerned by the whole situation (plus Saddam's threats to gas Israeli cities) but didn't want to get involved if their access to oil wasn't being restricted. They did share intelligence on the military build-up with the Kuwaiti government but, again, there was no real alarm and the US government, too, was caught mostly off-guard by the eventual invasion. Same goes for the Kuwaiti government's other allies.

It wasn't until literally the last minute, when Iraqi troops were moving into their territory and Iraqi agents were occupying the capital, that the Kuwaiti government realised the severity of the situation and that Saddam hadn't been bluffing, as they'd presumed, after all.