I've played 3-player using the No Non-Player Option (shaded section under 1.5 in the rulebook). I was teaching the game to two players so I played as the Government & Syndicate, they took one of the remaining factions each. It worked very well. Note that as well as using your lower victory margin in final scoring, you also can only win on a Propaganda victory check if both factions are at victory. This is quite challenging with this pairing where the Government are strong early and the Syndicate generally late in the game.
I suspect from the experience that the other option suggested there, where one player controls both 26 July & Directorio, will also work well.
The main alternative I can see is to use one bot, for this I would go with the Syndicate as non-player I think.
I think I prefer the no non-player option. I am just generally dissatisfied with the bots despite the fact that I love COIN in general.