We present an experimental realisation of Hardys thought experiment [Phys. Rev. Lett. {bf 68}, 2981 (1992)], using photons. The experiment consists of a pair of Mach-Zehnder interferometers that interact through photon bunching at a beam splitter. A striking contradiction is created between the predictions of quantum mechanics and local hidden variable based theories. The contradiction relies on non-maximally entangled position states of two particles.
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