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As mentioned, a short story will work for some readers, but not for others (myself included). With the "look inside" option people can already sample a short section of writing, so giving away a whole novel might cover the bases by attracting those who want to know if you can plot a longer story.
There is another factor, goodwill. If an author is willing to give me some of their work for free, I'm more inclined to buy other books. If the blurb is appealing enough for me to download the freebie, sometimes I'll quickly read a few pages and immediately buy the next book in the series or another of their books, while I'm still on their author page and they have my attention.
One more intangible. The freebie averages down the cost of another book, so I end up thinking of the books costing $2 each, rather than one free and one for $3.99.
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