Micrometer-sized polystyrene particles form two-dimensional crystals in alternating (AC) electric fields. The induced dipole-dipole interaction is the dominant force that drives this assembly. We report measurements of forces between colloidal particles in AC electric fields using optical tweezers, and find good agreement with the point dipole model. The magnitude of the pair interaction forces depends strongly on the bulk solution conductivity, and decreases as the ionic strength increases. The forces also decrease with increasing field frequency. The salt and frequency dependence are consistent with double layer polarization with a characteristic relaxation frequency ω_CD ~ a²/D, where a is the particle radius and D is the ion diffusivity. This enables us to reinterpret the order-disorder transition reported for micrometer-sized polystyrene particles [Lumsdon et al., Langmuir, 20, 2108 (2004)], including the dependence on particle size, frequency and ionic strength. With the knowledge of the polarization mechanism, we are able to predict conditions that lead to assembly for a wide range of particles differentiated on the basis of charge, size, solution conductivities, dielectric properties, and possibly even shape.