how to negotiate this offer?

I did 2 interviews last week, get 2 offers this week, almost the same day. 2 companies are in the same city, 1 mile away from each other. Size is also neck to neck.

I prefer company A, its work is more interesting, and facility is better, but it pays 3% less than company B.

I want to counter offer company A. Shall I mention the offer from company B? When company A fly me to do the on site interview, they do not know that I have another interview with company B. (Company B offer to buy the airline ticket for interview as well, since company A already paid it, so they just piggyback on it).

1. Simply counter with what I want, which is a match for company B.
2. Reference company B's offer, ask for a match.

Which choice is better, 1 or 2?

Thanks in advance,