The tendency of amphiphilic molecules to form micelles in aqueous solution is a consequence of the hydrophobic effect. The fundamental difference between micelle assembly and macroscopic phase separation is the stoichiometric constraint that frustrates the demixing of polar and hydrophobic groups. We present a theory for micelle assembly that combines the account of this constraint with a description of the hydrophobic driving force. The latter arises from the length scale dependence of aqueous solvation. The theoretical predictions for temperature dependence and surfactant chain length dependence of critical micelle concentrations for nonionic surfactants agree favorably with experiment.