The EPR criterion of reality says that a physical quantity has an element of reality if its value can be predicted with certainty without physically disturbing the system. The proposed criterion distinguishes what the system possesses from what one happens to measure.
A local hidden-variable theory supplements the preparation by a variable , drawn from a distribution independent of the later measurement settings. Its locality assumption is conditional factorization:
Alice's local response does not depend on Bob's setting , and Bob's does not depend on Alice's . Correlations can arise from the shared past variable . In a deterministic local hidden-variable model, the response probabilities are point masses at functions and . In particular, all possible local settings have definite values for a fixed , even when only one setting is used in a trial.
The setting-independence assumption is needed for comparing these predetermined values across different experiments. Conditional factorization is stronger than quantum no-signalling: no-signalling constrains observed marginal probabilities, whereas local hidden-variable theory constrains their decomposition at fixed . This distinction is what Bell theorem tests.
Fix a hidden variable in the deterministic local hidden-variable model, so that every is an integer. Let be the representative of modulo in . The terms in the chained modular Bell inequality alternate between the two parties. Before reduction their sum telescopes:
After reduction, the sum is a nonnegative integer congruent to modulo . For , the smallest possible such integer is . Thus for each hidden variable separately. Averaging over the setting-independent distribution gives
Here each expectation is the expectation value of the reduced random variable, not the residue of its expectation. Each term can be measured using one setting at each site. The proof uses their common deterministic assignments rather than any joint quantum measurement of incompatible local settings. Stochastic local hidden-variable theories satisfy the same bound: include their local random seeds in and average the resulting deterministic assignments.
The printed final coefficient in the definition of the average is typographically incomplete. The expectation used here is the usual , with final coefficient .
Take and label the first vector of each measurement basis by outcome . Assign the Pauli measurement value to outcome and to outcome . The four observables are
Here and are the Pauli X gate and Pauli Z gate matrices. These follow by subtracting the two rank-one basis projectors; a real basis rotated through has observable .
The Schmidt-basis Pauli correlation tensor of the state gives
Consequently , and , where . For binary outcomes, , whereas the final offset term has . The chained modular Bell inequality left side is therefore
The local bound is , so the exact violation condition is
Equality saturates the bound. The maximal violation for these fixed measurements occurs at or their common negative, giving . Opposite signs do not violate this particular inequality with these fixed bases, although other measurement choices can reveal the state's entanglement. If unnormalized real amplitudes are used, replace throughout by .

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