Checking incentive compatibility of a mechanism
An example:
Student type $t_1$ has 10 points to bid based on her GPA. Her favourite courses are A,B,C,D,E.
Student type $t_2$ has 0 points to bid based on his GPA. His favourite courses are F,G,H,I,J.
Student type $t_3$ has 1 point to bid based on her GPA. She ranks the courses alphabetically, A being best, Z being worst. (Or if there are only fifteen courses then O, as that is the 15th letter.) 

Assume sixty $t_1$ type, sixty $t_2$ type and one $t_3$ type students. If all types were to subscribe to their favourite kind of courses, then A,B,C,D,E would have sixtyone applicants and hence they would be oversubsribed. F,G,H,I,J would have sixty applicants and would be full. $t_3$ may lose the bidding war in a reasonable equilibrium of round 2: If all type $t_1$ students bid 2 points on each course they will all get their favourite picks while $t_3$ type, who can only bid 1 point will lose out on all picks. Now she can only pick K,L,M,N,O, as F,G,H,I,J are already full. She would have been better off if she had picked F,G,H,I,J in round one, as there she would have one the bidding for at least one of the courses. Thus the 'truth-telling' strategy is not an equilibrium and hence the mechanism is not incentive compatible.