I was thrilled at seeing an interesting bidding system in an academic institutions. This bidding is for registration of courses. Each student is allocated some points based on her grade point(GPA). So, a student with higher GPA gets more points. Each course has a maximum strength of 60 students and a set of say 15 courses is offered. A student bids higher for the courses that she wants and feels will be oversubscribed.
According to the literature in this subject, I know that this is not an incentive compatible mechanism as the students' bids are considered equivalent to their preferences but a student may bid more for a subject with less utility but which is has higher number of subscribers. Also, I feel that this is a kind of first price auction. Whatever bid I propose, it is consumed if I cross the minimum bid at which the subscription closes.
Courses are different and students have different preferences. Each student would bid for any number of courses that she prefers and expects to go oversubscribed. Students' preferences over courses are on academic basis i.e. courses that are popular or taken by some famous faculty. So, student's objective is to get her favorite course.
EDIT : In first round, the students give a list of 5 courses they wish to enroll in. In second round, bidding happens for the oversubscribed courses. So, if I entered course A in round 1 and it got oversubscribed, then in round 2 I will have to bid for it. After round 2, if I get the courses that I wanted then it's fine else I will have to choose some other course (for which seats are not completely filled) so that I have 5 courses.
I am not being able to understand in intuitive terms how a student can behave wrong and hide her true preferences while bidding in such a mechanism. Please help point out some intuitive examples which violate the incentive compatibility. Thanks in advance.