Compared to early expectations, the process of European integration has resulted in a paradox: frustration without disintegration and resilience without progress. The article attempts to develop an institutional explanation for this paradox by exploring the similarities between joint decision making (‘Politikverflechtung’) in German federalism and decision making in the European Community. In both cases, it is argued, the fact that member governments are directly participating in central decisions, and that there is a de facto requirement of unanimous decisions, will systematically generate sub-optimal policy outcomes unless a ‘problem-solving’ (as opposed to a ‘bargaining’) style of decision making can be maintained. In fact, the ‘bargaining’ style has prevailed in both cases. The resulting pathologies of public policy have, however, not resulted either in successful strategies for the further Europeanization of policy responsibilities or in the disintegration of unsatisfactory joint-decision systems. This ‘joint-decision trap’ is explained by reference to the utility functions of member governments for whom present institutional arrangements, in spite of their sub-optimal policy output, seem to represent ‘local optima’ when compared to either greater centralization or disintegration.