The sunk cost fallacy refers to when someone won't depart from an entity because of how much they've already invested, even if that entity is clearly a detriment. For example, you stay in that toxic relationship making you unhappy because you've been together so long that you don't want to feel like you wasted all that time.
In this case, the Lakers must understand whether or not Westbrook is on the roster is irrelevant. You owe him 47 million dollars. Place your ego aside and cut him. Yes, it'll mean paying someone millions who will not be on your roster, but it's what you have to do. Because right now, it's clear no one in the NBA views Westbrook as an asset worth trading for, so you need to face reality and stop holding out for a trade.
The Westbrook-Lakers experiment has failed. And maybe Westbrook can still go elsewhere and turn back the clock, but that should not be of the concern of the Laker front office.
Their primary concern is what is best for the franchise, and in this case, that means addressing the elephant in the room and getting Westbrook as far away from the team as possible.