Renormalization of Boundary Fermions and World-Volume Potentials on D-branes

We consider a sigma model formulation of open string theory with boundary fermions carrying Chan-Paton charges at the string ends. This formalism is particularly suitable for studying world-volume potentials on D-branes. We perform explicit two-loop sigma model computations of the potential T-dual to the non-abelian Born-Infeld action. We also discuss the world-volume couplings of NS fluxes which are responsible for Myers' dielectric effect.