Thought I'd dive in here:
billschnieder said:
In other words, the relationship we derived from properties within a single pair of photons does not apply between properties from 3 different pairs of photons.
That only works because (referring to the notation used in derivations of Bell inequalities), you've not only allowed the past information \lambda to change from one round of a Bell test to the next, but you've given a model where the hidden variables are specifically tuned for the measurement settings in each round.
Suppose I add a subscript i to the individual correlators, referring to the correlator's expectation value in the ith round of a Bell experiment. Then if I understand you correctly, you're saying that Bell's theorem would only establish something like
C_{i}(\bar{a}, \bar{b}) + C_{i}(\bar{a}, \bar{c}) - C_{i}(\bar{b}, \bar{c}) \leq 1 \,, \quad \forall i \,. \quad(*)
But in an actual Bell test, Alice and Bob might measure (\bar{a}, \bar{b}) in the first round, (\bar{a}, \bar{c}) in the second round, and (\bar{b}, \bar{c}) in the third. There's no particular reason the inequality should hold for correlators from different rounds, so it is entirely possible that
C_{1}(\bar{a}, \bar{b}) + C_{2}(\bar{a}, \bar{c}) - C_{3}(\bar{b}, \bar{c}) \nleq 1 \,.
If that's your point, then it's true but it doesn't invalidate Bell's theorem or render it untestable. The reason is that Alice and Bob's measurements are supposed to be chosen randomly, so you don't know in advance which measurements they're going to perform in each round. This matters because, while you can arrange for the Bell inequality to be violated for a particular sequence of measurements with a locally causal model, you can't arrange for it to be violated for
all of them.
This is easy to see. Suppose we consider a three-round Bell test where each of the three terms in the inequality is measured once
*, and we define S_{ijk} = C_{i}(\bar{a}, \bar{b}) + C_{j}(\bar{a}, \bar{c}) - C_{k}(\bar{b}, \bar{c}), with the labels ijk identifying which correlator was tested in each round (there are six possible permutations: 123, 132, 231, 213, 312, 321). Then it is entirely possible that the inequality S_{123} \leq 1 is violated, but not for instance all three of S_{123} \leq 1, S_{231} \leq 1, and S_{312} \leq 1 simply because the condition (*) above implies
S_{123} + S_{231} + S_{312} \leq 3 \,.
The average over the six possible tests, which is also the expectation value of the full Bell correlator, satisfies the inequality: \langle S_{ijk} \rangle \leq 1.
So while it is
possible to observe a Bell inequality violation according to local causality, such a violation would constitute a statistical outlier. It cannot be guaranteed deterministically if Alice's and Bob's measurements are not known in advance, and the probability of a significant Bell inequality violation drops exponentially fast in the number of rounds.
The bottom line is: to get anything more than an "accidental" Bell inequality violation in a locally causal model, it's not enough just to let the hidden variable \lambda vary from one round of a Bell experiment to the next. It must also be correlated with Alice's and Bob's measurement choices (in violation of what's sometimes called the "no conspiracies" or "free will" assumption).
As an aside, is there a reason that this discussion has been based around Bell's original 1964 inequality? Refreshing my memory on it, my impression is that more modern Bell inequalities (such as CHSH) admit cleaner and more "black box" derivations.
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* This is just for simplicity of exposition. Of course, there would be no way for Alice and Bob to do this without communicating with each other.